Q: I am filing chapter 7, pro se, no assets case, but wish to keep my car which I owe $4500 with a blue book value of only
…$2800. I am current on my $150 monthly car payments and can easily afford to continue it with my monthly budget. I don’t mind being upside down on it because it’s super reliable & I’ve put a lot of parts/labor into it. Please inform me of the PROPER procedure to request at the reaffirmation hearing, to persuade the judge to ‘DENY my reaffirmation’ (even though there’s no hardship)—so that I won’t be on the hook for the deficiency if something goes wrong mechanically or it gets totaled? OR is it easier to just not appear at the hearing, in order to obtain this ‘denial?’ From my research, it appears as a ‘denial’ is in my best interest, (as I can’t afford enough for a lump sum payment with the ‘redemption’ process). Your advice is appreciated, as i prep for my case. Thanks!
A:
The following assumes you are filing in Arizona. A denial of the reaffirmation is NOT bad. It means you can keep the vehicle so long as you are current on payments at the time of the reaffirmation hearing, and that you stay current. Also, the vehicle needs to be insured. The judge denies the reaffirmation in order to protect you from the future consequences of you not being able to pay for the vehicle, or it craps out on you. That way the lender can repo the vehicle, but cannot sue you because the debt was discharged in the bankruptcy.
I highly recommend that you make an appointment to talk to a volunteer lawyer at the Arizona Bankruptcy Court's Self-Help Center. Their phone number is 602-682-4007, or 4010. Please do this BEFORE filing a bankruptcy so you can avoid any nasty surprises.
I hope this is helpful, Diane L. Drain
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A: In a Chapter 7 bankruptcy, you are indeed given an opportunity to reaffirm debts; reaffirming your car loan would mean that you agree to continue making payments on the car and keep it. When you attend the reaffirmation hearing, you can express to the judge your desire to have the reaffirmation agreement denied, citing your reasons, including the condition of the car, your financial situation, and any other relevant factors. It is generally advisable to attend the hearing to communicate your wishes clearly to the judge, rather than avoiding the hearing, as your active participation may help in guiding the outcome to be in your best interest.
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