I Had An Automobile Loan Prior To Filing Bankruptcy
Q: I had an automobile loan prior to filing bankruptcy. At the hearing the Judge denied the creditors motion to reaffirm the auto loan since I had possession of the vehicle and I was not delinquent in payment. In my credit report now after the BK, the loan sporadically shows up here and there. It either shows as included in bankruptcy or doesn't show at all. I have been on a 1 year letter writing campaign to all the bureaus but it requires almost an act of congress to deal with those folks. So my question is this, since the loan is not benefiting me by listing on my report as being a current loan and in good standing should I: (1) Continue to pay and hopefully when I try to buy my home next year that the lender will take time to call and verify the loan status with the car loan people (2) Let the auto loan people come and take the van since it is not benefiting me - will this result in negative on my report?. (3)DO lenders only look as ISAAC score when considering a loan or do they take into consideration other accounts that are not listed?.
A: Unfortunately there is little uniformity between Bankruptcy Courts in different districts of the Country. It is hard to answer your question thoroughly without knowing what Bankruptcy Court you filed with. Until recently many courts would, as a matter of course, deny reaffirmations such as yours. That has greatly changed due to case law which now supports the right of a secured creditor to obtain a reaffirmation agreement in situations such as yours. I do now know when you filed but if you were filing now the result might be different. As to your credit record. If the credit report is wrong your legal right is to send a written notice correcting the error. The reporting agency must correct the evidence upon receipt of their error. If they do not they are in violation of the credit reporting act. This will only be helpful if the information in the report is inaccurate. Technically, even though you are paying the debt and while the case is open the creditor could not foreclose on the car loan without leave of the Court (which would probably not be granted unless you fell behind in your payments or did damage to the car which brought the value down significantly) the debt is part of the Bankruptcy and the lising in the credit report is correct and probably cannot be changed. If you use the car you may have no choice other than to accept this situation because buying a new car could be problematic with the Bankruptcy on your record. If you let them take the care and wipe out the debt then the issue of the credit report becomes even more serious because you will now have defaulted on the loan and that will show on your credit record for a long period of time. I don't know when you filed the Bankruptcy but if you are employed in a secure position with a decent income it should not take too long to reestablish your credit. A few years ago Purdue University did a study on this very Subject. .