Will my secured debt creditor take the initiative to repossess the property?

Question

I filed for a chapter 7 bankruptcy earlier this year and received a discharge judgement in May of 2024. Along with my unsecured credit card debt, the bankruptcy also discharged a secured debt in the form of an auto loan. I had not signed the provided reaffirmation agreement provided by the creditor as I wasn't in a financially stable enough situation to make a promise on that agreement. It's going on about 8 weeks since the final judgement and I still haven't heard anything further about what the auto loan holder wants to do about the vehicle.

James L. Arrasmith · Answer

Based on the information provided, here's an analysis of your situation: 
 
1. Discharge of secured debt: While your Chapter 7 bankruptcy discharged your personal liability for the auto loan, it did not eliminate the creditor's security interest in the vehicle. 
 
2. Reaffirmation agreement: By not signing the reaffirmation agreement, you've maintained your discharge of personal liability for the debt. This was likely a prudent decision if you weren't financially stable enough to commit to the payments. 
 
3. Creditor's options: The auto loan holder (secured creditor) has a few options: 
   a) Repossess the vehicle 
   b) Allow you to keep the vehicle and continue making payments (known as "ride-through" or "retain and pay") 
   c) Negotiate a new agreement with you 
 
4. Timing of repossession: There's no set timeframe for when a creditor must repossess a vehicle after a bankruptcy discharge. Some may act quickly, while others might wait. 
 
5. Creditor's initiative: In most cases, creditors will eventually take action to protect their interest in the collateral (the vehicle). However, the timing can vary significantly. 
 
6. Your current situation: The fact that it's been 8 weeks since the final judgment without any action from the creditor is not unusual, but it doesn't mean they won't act eventually. 
 
Given this situation, here are some suggestions: 
 
1. Be prepared: Even though the creditor hasn't acted yet, be prepared for the possibility of repossession at any time. 
 
2. Communication: You could consider reaching out to the creditor to clarify their intentions. However, be cautious not to make any promises or agreements that could be construed as reaffirming the debt. 
 
3. Financial planning: If you want to keep the vehicle, consider setting aside money for potential negotiations or to catch up on payments if the creditor is willing to let you keep the vehicle without reaffirmation. 
 
4. Legal advice: If you're unsure about your rights or the best course of action, consider consulting with your bankruptcy attorney or a local legal aid organization for advice specific to your situation. 
 
Remember, while the creditor may not have taken action yet, they still have the right to repossess the vehicle. Stay vigilant and be prepared for this possibility.

Q: Will my secured debt creditor take the initiative to repossess the property?