I filed for a Chapter 7 in August of 2007 and signed a reaffirmation agreement to keep my car. I received my discharge in December of 2007. I am now going through a divorce and can not afford to keep my car, plus it has a negative equity and I can't sell it for what I owe. Can I surrender it to the bank? What effect will that have on my credit?
-- Betsy
A.
The reaffirmation agreement makes you liable for the entire unpaid contract balance of this debt, just as though you had not filed bankruptcy.
You can surrender the car. The bank will sell the car at auction and look to you to pay the shortfall between the auction proceeds and the contract balance.
This will be a negative on your credit report, but more importantly, there will be a creditor out there with the right to a judgment and all the rights that a judgment brings with it.
