Car Loans and Bankruptcy

If you find yourself having to file for bankruptcy and you have an outstanding car loan, there are some things you should know. If you owe more than your car is worth because of depreciation, lenders would not want to take a loss by repossessing your car. In this case you can reaffirm your car loan so you won’t lose it.
Reaffirming your loan can help to build your credit back quicker after bankruptcy. Reaffirming your loan is defined as you’re agreeing to continue to make payments as normal. In this way you are able to keep your car. There’s no reason to reaffirm if you can’t continue to make the payments. You are not legally forced to reaffirm a loan after filing bankruptcy and sometimes it’s in your best interest not to. If you’ve chosen to reaffirm your loan, just get in contact with your lender and sign a written agreement stating your legal obligation to repay the loan.
You continue making payments as though you’d never filed. Failing to make payments on a reaffirmed loan can have serious consequences including loss of property and being sued so take it seriously and keep careful track of your finances. Reaffirming a loan is never mandatory.