Reaffirmation and Your Credit

On the Reaffirmation page of this website, I explain that it’s generally better for you if you can avoid reaffirming your car loan. Most clients instinctively want to sign that reaffirmation agreement because they think they need to sign it in order to keep their car.

A lender does have the legal right to repossess your car after your file bankruptcy even if you stay current on the payments. But many lenders won’t require you to sign a reaffirmation agreement in order to avoid repossession of your car. Those lenders are satisfied as long as you make all your payments on time. The term for this is “pay and retain”. I simply ask the vehicle lender if the lender will allow my client to pay and retain. Of course, I get the answer in writing. More often than not the lender says “sure”.

However, some lenders won’t report the payments you’ve made after bankruptcy to the credit reporting agencies if you don’t reaffirm.

If the lender agrees to allow you to pay and retain is it worth it to reaffirm so that your credit report shows all the post-bankruptcy payments you’ve been making? Probably not. It’s usually too big a risk that you might default on the car loan and then you’d get sued on the loan. Also, you can probably get those post-bankruptcy payments on your credit report. Just request a payment history from the car lender and submit it to the credit reporting agencies to correct the record.

I have also heard that some vehicle lenders won’t allow you to make payments through the website if you do not reaffirm. Is it worth it to you to reaffirm just to avoid having to call in your payments once per month or mail a check? Probably not.

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