Expert: Terry Leeders - 12/11/2008

Question
During my BK, I reaffirmed an auto loan. However, I was told by my lawyer that I could change my mind and surrender the vehicle as long as it was done before the discharge took place. My question is, I filed the paperwork to surrender the vehicle with the court and my Lawyer before the discharge took place. The vehicle was picked up by the bank over two months ago. Is it legal for them (USAA) to continue to report my loan as 30/60/90 days late on payment when I have surrendered the vehicle and I have not had any control of the vehicle for approx 75 days?
My credit report is already shot and now it is suffering even more due to the delinquent reporting by the bank.
Please help!!!
John

Answer
Yes, you can rescind a reaffirmation within 60 days of signing it, or the date of discharge, whichever is later.  The creditor would then have the right to collect the collateral, then liquidate it to recoup whatever they can out of the asset, with any remaining balance being discharged through the bankruptcy case.

The bankruptcy should trump the payment history.  Occasionally, they will mis-report it on the report, because you did sign the reaffirmation originally.  You can usually contact the credit bureau to do an investigation about the mistake, and they have a duty to fix any errors accordingly, giving you a copy of the 'clean' report once fixed.