Expert: Mark J. Markus- California Bankruptcy Attorney - 8/1/2009

Question
Is it necessary to reaffirm an auto loan in a California Chapter 7 BK? I intend to keep and pay for the vehicles but don't see the logic of reaffirmation.

Answer
There is no logic to reaffirmation, so your thinking is good. Unfortunately, it is the only way to ensure that your vehicle won't be repossessed after the bankruptcy case (chapter 7) is completed.  Many vehicle creditors will allow you to just continue making payments without doing a reaffirmation agreement, but there are a few (Ford, Chrysler and a couple others) who will repossess even if you are current with payments.....presumably just to make a point.  We all don't know what that point is, but that's what they do.

The bottom line is how much risk you want to take.  If you're comfortable getting a "new" car if the present one gets repossessed, then I'd just keep making payments and not do a reaffirmation agreement.  In any event, you need to discuss this with your attorney.

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