Reaffirming Debts in Order to Keep Vehicles after Filing Bankruptcy

In Roberson v. Ford Motor Credit Co. LLC the Maryland Court of Appeals held that Creditors can require that individuals filing bankruptcy execute reaffirmation agreements if those filers or debtors want to keep their motor vehicles. Reaffirmation agreements "reaffirm" the original contract terms. Thus, the debtor signing the reaffirmation agreement, is on the hook for any deficiency if their vehicle is repossessed after bankruptcy for a failure to make the loan payments and sold for an amount which is less than the balance of the loan. Despite the Roberson decision, most debtors are better off not reaffirming. Ford Motor Credit is one of the few creditors that require reaffirmation agreements. Most creditors understand that it is better to receive payments from a debtor while that debtor can make them than repossess a vehicle and sell it for an amount which will not satisfy the loan.

Even if a debtor feels forced to sign a reaffirmation agreement, courts often do not approve these agreements. If this happens it is almost a certainty that the debtor will be able to keep the vehicle as long as he or she makes the payments.

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