When Creditors Won’t Reaffirm
By Jacqueline S. Edington, Paralegal
Bob (not his real name) filed a chapter 7 bankruptcy. Bob stated that his intentions on a 2007 motorcycle were to reaffirm. In the usual frame of time Bob received his Order in No Asset, meaning Discharge was right around the corner. Bob realized that he had never been sent a reaffirmation agreement for the motorcycle. I contacted the creditor. The creditor refused to reaffirm the debt and explained that Bob could simply continue making his monthly payments. “We just do not give out reaffirmation agreements,” was the response I received.
Now, the consequences of making monthly payments without signing a reaffirmation agreement are that the creditor may come and take the property at any time. This repossession could occur regardless of how long or how many payments you have made to the creditor. Not an ideal situation for a motorcycle you plan to keep.
When I relayed the creditor’s reply to Bob, he was understandably upset. He decided that maybe if he called them he could reason with the creditor. I listened to his phone conversation in my office. His career, or calling you might say (for Bob is an ordained minister), was one where he was adept at persuading people. “I want to pay you people the money I owe you,” were some of the words he used. Bob truly wanted to do “the right thing.” But again, the creditor rejected Bob’s sincere desire to reaffirm the debt.
When I approached my boss, and Bob’s attorney, to discuss the situation, he suggested redeeming the motorcycle. I drafted a Motion to Redeem for a ridiculously low amount far below the fair market value of the motorcycle. The reason I did this was so the creditor would be forced to produce the reaffirmation agreement. No Objection was made by the creditor within the specified time period and the Judge issued an Order. We were astounded!
My boss, still leery, told Bob that the creditor had thirty days to appeal the Order. We waited thirty days and nothing happened. Meanwhile, Bob had sent a check to the creditor for the amount ordered. The check cleared but Bob did not have a Title to the motorcycle.
I sent a letter to the creditor giving them thirty days to send the Title to our office. Lo and behold the Title arrived! Bob owns a 2007 motorcycle valued at $8,500.00 that had a lien on it for over $10,000.00 for the mere sum of $500.00! It would have served this particular creditor well if it would have reaffirmed the debt with Bob. Too many times we are letting creditors call the shots and intimidate our clients. At our firm we fought back and won! Now Bob thinks we are wonderful and has already referred several clients to us. It pays to treat your client’s situations with due diligence!