Hot of the presses: The law has changed in the state of Maryland. Let me set the stage: When a person files bankruptcy and they own a car and making payments on the car, that person is permitted to keep the car as long as they remain current on the payments. A "reaffirmation" agreement is something that a person signs AFTER he or she files bankruptcy, and it is an agreement a car owner signs with the company who has the lien on the car that essentially says "even though I filed bankruptcy and can discharge (not be responsible for) the debt, I am going to sign a NEW contract saying that I will be resonsible for the debt." Now, in the past, as bankruptcy lawyers in Maryland, we always advised our client's NOT to sign reaffirmation agreements. That was because it use to be that as long as the owner was making the payments on time, the car loan company had absolutely no right to repossess the car. However, the Maryland Court of Appeals, in the recent case of Ford Motor Credit Company, LLC, v. Maureen P. Roberson, states that the car loan company (Ford Motor in that case) has the absolute right to repossess the car EVEN if the owner of the car is current on all of the payments. Since the contract between the car loan company and the owner said, in part, that "if the owner files bankruptcy, the car loan company has the right to repossess the car," Ford Motor Company had the right to repossess car. In the past, we advised our client's to NOT sign a reaffirmation agreement because we wanted to protect in the event that in the future they fell behind on their payments, the debt would still be dischargeable in the bankruptcy. We cannot advise that any longer. Now, we must advise all car owners with car payments that they must sign a reaffirmation agreement or they risk having their car respossessed. So, if you own a car and you are filing bankruptcy, no problem. However, you must understand that you are going to have to sign a reaffirmation agreement, which means if you fall behind in the future, you ARE going to be responsible for the debt even though you filed bankruptcy.
The Maryland Bankruptcy Center is comprised of lawyers and attorneys who file Chapter 7 and Chapter 13 Bankruptcy's for Maryland residents. We have offices in Anne Arundel County, Howard County, Baltimore City and very soon we will be in Baltimore County. We also work with attorneys who have offices in Prince George's County and Montgomery County.
E-mail me at firstname.lastname@example.org or call me at (410) 766-4044 or (301) 587-8900. All consultations are free, and there is no such thing as a dumb question.
David L. Ruben, Esquire