Can I get an auto loan reaffirmation in bankruptcy?

If you file a Chapter 7 bankruptcy and are behind on your car payments, you will be required to reaffirm the auto loan if you wish to keep the car.  To reaffirm a debt, you must sign a reaffirmation agreement with the finance company which sets forth the repayment terms.  In many instances, you will be required to repay the loan according to its original terms.  However, there are instances where the lender will agree to modify the terms of the loan and you will be able to repay the loan according to the modified terms. 

When you choose to reaffirm a debt, that debt will not be discharged.  This means that if you default on the debt after the court discharges and closes your case, the lender can pursue collection efforts against you, including repossession and a deficiency judgment. 

If you sign a reaffirmation agreement and later change your mind, you have the right to rescind the reaffirmation agreement.  To rescind the agreement, you must file a notice with the court at any time before discharge or within 60 days of the date the reaffirmation agreement was filed with the court, whichever is later. 

There is a presumption that reaffirmation will create an undue hardship for a debtor if, after paying the debt, he will be left in a negative cash flow position each month.  In such instances, the court will hold a hearing to give the debtor an opportunity to prove that he will have assistance paying the debt or that not being allowed to keep the car (or other property) will create an even greater hardship for him.  Before signing a reaffirmation agreement, is best to speak with a qualified bankruptcy attorney.