I helped by brother-in-law file a "pro se" chapter 7 bankruptcy. He decided to file as an individual because the only debt that was also in his wife's name was a car loan that they intended to reaffirm anyway. (She is the beneficiary of a Crummey Trust which would have opened up a huge can of worms if it was included in the bankruptcy estate.)
The reaffirmation agreement supplied by the bank is about $2,500 higher than the $15,000 it should be. It is exactly 30 days past the creditors' meeting and we will try to get a corrected agreement from the bank ASAP, but it raises some questions:
1. Is it common for banks to try to inflate the amount of a loan in a reaffirmation agreement?
2. Should they even bother with a reaffirmation agreement? I am worried about a repossession and the bank going after the wife for the deficiency, but from what I'm reading it wouldn't seem to matter in Massachusetts whether or not there is a reaffirmation agreement.
3. If he has stated his intention to reaffirm the debt on Form 8 and is not able to make a reaffirmation agreement or now simply wishes to "retain and pay" and rely upon the protection of Massachusetts Law, does he need to file any amendments or other paperwork with the court?
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First be careful not to give
First be careful not to give legal advice if you are not a qualified attorney. I worry that when you try to help, like you are here, you are opening yourself up to a lot of liability and may even get sued if you tell your clients the wrong thing to do.
With that said it is extremely rare that anyone in Massachusetts reaffirms a car loan. In fact it is so uncommon that you are sure to get a hearing before the Judge because the Judge will want to know why you are reaffirming and he may deny the reaffirmation. The federal bankruptcy laws say that a lender can repossess collateral (in this case your car) even if you are current. However, in Massachusetts, lenders are prohibited from repossessing if you are current with the loan. So tell your clients to pay their loan on time and never be late and they will be fine.
Finally, if this was not a car and some other sort of collateral, it is still unlikely that a lender would repossess or foreclose so long as you remain current. Bank’s are in the business of having revenue streams and not owning homes or cars. It would be VERY surprising to learn that a bank took such a drastic action as to repossess or foreclose on property if you are current with the loan.
Good luck. Attorney Robert Kovacs