Posted On: April 9, 2010

The Reaffirmation Procedure

A Sacramento bankruptcy lawyer chats about the reaffirmation procedure

Liens are charge on your car up to the amount of the loan. Bankruptcy whether it be a Chapter 7, 13, 11 or 9 will not release the lien from your car. Liens survive bankruptcy. Filing will relieve you of your personal obligation to pay back the loan supporting the loan. The lender however will be able to repo the car due to its lien. In order to keep the car you must keep the debt. A lot of thought should be put before reaffirming your car.

Keeping the car you’re financing after bankruptcy depends on several factors. You should analyze these factors and weigh the pros of keeping the car versus letting it go. First consider the amount and the interest rate. A high principle cuts against reaffirming your car loan while a low amount is sure to be paid off quickly. Likewise a high interest rate is another deterrent that contravenes a ‘fresh start’.

Next regardless of the budget listed in your bankruptcy petition draw up a current budget at the time you get the reaffirmation agreement. It may be significantly positive since you’re not paying the credit cards. If you find that you’re monthly income after expenses and deductions is greater than or equal to the car payment then you know you’re able to handle the financing agreement post bankruptcy.

If the financed car is your only means of transportation that definitely weighs more heavily than a high principle and/or high interest rate because its your only means of transportation.

Many attorneys will not sign the reaffirmation agreement thinking its in your best interest not to reaffirm. They’d better hope the car doesn’t get repossessed. You can file a pro se reaffirmation by filling out the reaffirmation agreement and sending it to the lender’s attorney who will then file it with the court. A reaffirmation hearing will be set where the judge assigned to your case will examine the terms of the loan and your budget and determine whether its in your best interest or not.

Lenders usually recognize that judicially denied reaffirmations represent the bankruptcy filer’s best efforts to reaffirm and do not repo the car even though they don’t have a reaffirmation agreement approved.

If you have questions regarding Bankruptcy in Sacramento please contact us at (916) 492-6020 in Sacramento or (916) 724-1690 in Roseville for a free consultation or visit and we can connect you with one of our experienced Sacramento Bankruptcy Attorneys. After you have spoken with one of our Sacramento bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Sacramento Bankruptcy Lawyers can assist you with all aspects of your bankruptcy or legal debt settlement case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, Sacramento and Roseville!

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