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To Reaffirm or NOT to Reaffirm Your Car Loan
In a bankruptcy ALL your debt is discharged (except for a few specific things which cannot be discharged under the law).
NOBODY can ever ask you to pay a discharged debt.
You can, however, voluntarily pay anything.
In Massachusetts, even if you do not reaffirm, as long as you are making payments on time (even if a debt is discharged), creditors cannot take your car. SO, you can continue making your car payment if you want to keep your car but the creditor will not be allowed to send statements (because that would be the same as asking you to pay a discharged debt) OR, you can stop paying each month and the creditor will repossess the car.
If you do reaffirm the agreement with the creditor they can ask for payments and they will be able to send statements. The debt is no longer discharged and it can NEVER be discharged in any future bankruptcy EVER!
If, after reaffirming a car loan, for some reason you stop paying the monthly car payment, the creditor will come and take the car. They will sell the car at auction at a price that is usually less than what you owe and you WILL have to pay the difference.
If you do NOT reaffirm and you do not make the monthly payment… then the creditor will repossess the car and the debt was previously discharged and you WILL NOT owe them anything.
ADVANTAGE to Reaffirmation –
You will receive monthly statements.
DISADVANTAGE to Reaffirmation –
You risk paying money for a car you no longer have and cannot afford.
According to rules set up by the Supreme Judicial Court of Massachusetts, this website is considered “advertising.” It is designed to give our clients and friends general information and it is not intended to provide opinions regarding any specific situation. The information is general in nature and does not constitute any attorney/client relationship.