What to do if auto loans were not reaffirmed in bankruptcy but are still being reported to the credit bureau?

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What to do if auto loans were not reaffirmed in bankruptcy but are still being reported to the credit bureau?

My fiance and his ex-wife filed for and were discharged from Chapter 7 bankruptcy 3 years ago. They both kept a car and car payment, but did not reaffirm the debs. He has talked to the credit union where the loans are held and looked through his bankruptcy paperwork to confirm this. Since then, the credit union has been reporting the debts to the credit bureau. Every time his wife is 30…60…90 days late, my fiancé takes a hit to his credit. Can the credit union continue to report positively or negatively on a discharged loan?

Asked on February 20, 2011 under General Practice, Maryland

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Technically the loan - and any deficiency - was discharged in the bankruptcy as long as he is sure that it was listed on his petition and it was not reaffirmed.  So then the credit union should not be reporting the delinquency.  What they can do is repossess the vehicle.  Buying a car entails two things: signing a promissory note for the loan (which is what was discharged in the bankruptcy) and giving the lender a property right: a lien on the vehicle .  The latter is not discharged in the bankruptcy and survives.  You may want to dispute the debt with the credit reporting agencies and speak with an attorney about having them enjoined from continuing to report it as a debt.  Good luck.


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