Expert: Terry Leeders - 1/15/2008

Question
Hello:

My husband and I were just discharged of our Ch 7 bankruptcy in December. Along with the bankruptcy, our home was foreclosed and we did not reaffirm either of our vehicles. We have chosen to continue making monthly payments on one of the vehicles, but we cannot decide if it is worth it financially to keep both. My question is: if we voluntarily return our vehicle to the lender, and we included the vehicle in our BK, but never sought reaffirmation, how would that be reported on our credit report? Would it currently show up on our credit report as "discharged under Ch. 7 BK?" If we continue to make regular on time monthly payments, by law, does our lender have to report this to the credit bureau? Once we pay off a vehicle, if it was not reaffirmed, will it still show up as paid in full on a credit report? Please advise. Thanks.

Answer
The car note is probably being reported as discharged on your report since you did not sign the reaffirmation, so nothing will change if/when you surrender the vehicle to the lender.  You will not get 'credit' for timely payments.  You can talk to the credit bureau to see how it will be reported if you do indeed pay it off, I do not specifically know, but my hunch is that it will still show as discharged in bankruptcy.