Personal Bankruptcy Rescinding a vehicle reaffirmation

[laura1]

I have a question. I filed Chapter 7 and had a negative DMI of over $500.00. My automobile is worth about 8000, I owe about 5000. My Lawyer, Lendor and I signed a reaffirmation. The court set a discharge hearing. After speaking with my Lawyer, he suggested I rescind my agreement. He said he would file all the appropriate paperwork and not to contact the Lendor, Chase. He said the odds of being repoed are 50/50. I am current on payments.
1. Will rescinding cause them to repossess my vehicle?
2. If they plan on repo, will I get any notice?
3. Would it happen after discharge? The reason i ask is I would want to call them after discharge and tell them I plan to stay current and see if they allow a ride through (I have heard they do)? I am scared that not notifying them of my plans, as suggested, they will repo.

Any advice or thoughts would be greatly appreciated.
Laura

 

[fredrikklaw]

Rescind with confidence!

Chapter 7 bankruptcy allows a debtor to rescind an affirmation agreement as long it is done the later of i) sixty (60) days from the date such reaffirmation agreement has been filed with the court or (ii) the date the court issues the discharge order. So, you must still be within the proscribed limits in (i) since your attorney is filing the paper work for the rescission. As for your concerns about repossession; while I will not second-guess your attorney, I do not agree with his 50/50 projection of the odds.

First and foremost, as long as you stay current on the monthly loan payments, no one is going to, or has the legal right, or the legal cause to pull the rug from under you regardless of the current status of the petition or its future outcome; so that is that. Here, once the rescission is complete, your status in regards to this particular creditor and the petition itself reverts to what it was at the time of the filing and as such, Chase will have once again be barred from contacting you in any shape or form for collection purposes or attempt repossession until you all convene at the discharge hearing (or the Creditors Meeting).

So, the answer to question (1) is obviously no, which the other questions somewhat redundant, but here is a little warning, or a heads-up if you will, about what you stated in question (3). After discharge and unless reaffirmed, the temporary injunctions placed on creditors become permanent and you can try to contact them all you want, but you will not get any response whatsoever. But you need not worry about Chase taking your vehicle back without getting a PASS from the bankruptcy trustee.

Good luck with your petition.

fredrikklaw

 

[despritfreya]

I do not agree with his 50/50 projection of the odds. . .First and foremost, as long as you stay current on the monthly loan payments, no one is going to, or has the legal right, or the legal cause to pull the rug from under you regardless of the current status of the petition or its future outcome. . .After discharge and unless reaffirmed, the temporary injunctions placed on creditors become permanent and you can try to contact them all you want, but you will not get any response whatsoever. But you need not worry about Chase taking your vehicle back without getting a PASS from the bankruptcy trustee.

Laura,

We have discussed this on the other forum. The above information is not correct.

First, your Trustee has absolutely nothing to do with this issue. He/she could care less if you do or do not reaffirm. A Trustee's job is to liquidate assets for the benefit of creditors. He/she has no duty to you.

Second, if you do not reaffirm, once the stay is lifted, your lender has the right to repo even if payments ARE current, UNLESS there is a law in your State that protects consumers from a non-monetary default. This has been the law in the 9th Circuit (California and Oregon are part of the 9th Circuit) since 2008. See the following case, which is quoted in part below:

In re Dumont, 383 B.R. 481 (9th Cir. BAP, 2008)

ISSUE: What are the effects of BAPCPA sections 362(h), 521(a)(2) and (6), and 521(d) on Parker and the "ride through" option?

New section 521(d) allows ipso facto default clauses to be enforced, notwithstanding other Code restrictions that previously prevented or limited the enforcement of such clauses that placed a debtor in default for filing bankruptcy. Section 521(d)13 expressly refers to sections 521(a)(6) and 362(h)(1) and (2) so that a debtor who "fails timely to take the action" under those sections no longer has Code protection against an ipso facto default. Where otherwise enforceable, ipso facto default provisions may now be used by creditors to repossess, contrary to the previous Code limitations. However, there may be other restrictions on such creditor actions. First, when section 521(d) applies, permitting an ipso facto default clause to be effective, the creditor who repossesses must still abide by state law. Some state consumer protection statutes prevent a creditor from repossessing when there is no payment default. These state consumer protection statutes have the potential to make the aforementioned BAPCPA provisions meaningless if repossession is barred by state law when a debtor's payments are current.

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Now, as a practical matter, and assuming there is no "consumer protection" law in Oregon, the Judge may deny a Reaffirmation Agreement and may caution the lender about repossessing if payments are current. This happens in my jurisdiction. To date, I have not seen any cases that discuss what happens if a Judge denies the Reaff, warns the lender but the lender repos anyway.

Based upon this your attorney's 50/50 comment is spot on.

Des.