A reaffirmation is an official way to “reobligate” yourself on the loan. This involves the lender sending us a reaffirmation contract to be signed by you.
How Do I Continue Paying on My Car or Mortgage After I Have Filed but Before the Reaffirmation Is Filed with The Court in Minnesota?
Once your case is filed, an automatic stay goes into effect. The automatic stay is a court order mandating that none of your creditors can continue collection actions while your bankruptcy is pending. This order applies to secured creditors such as mortgages and car loans even if you intend to keep the loans. The order no longer applies after we file the reaffirmation with the court. Between the time of filing your case and filing the reaffirmation, you can continue paying on your car loan or mortgage, but will have to do it through different channels until the reaffirmation agreement is filed with the court.
Automatic withdrawal from your bank account and even sending you a monthly bill during the bankruptcy are considered collection actions, so to avoid breaking the court order, lenders will cease automatic withdrawals, online payments, monthly bills, and most will not accept payment through normal channels. However, they will continue to accept payments from you.
Call your lender, inform them that you have filed for bankruptcy protection and that you wish to continue making payments. They will give you the information you need to complete payments during the bankruptcy. Most lenders have you send the payments to their “bankruptcy department.”
The reaffirmation is completed by your lender and will be sent to our office. We will review the reaffirmation and send to you to sign and return to us. The reaffirmation will then be filed with the court. This usually occurs 6- 8 weeks after we file your case. If you have filed chapter 13 bankruptcy, there will be no reaffirmation, but if you intend to stay in your home or keep your car, the same applies, but the payments will return to normal once the court confirms your plan.
If you choose not to file a reaffirmation but do intend to keep making payments on the home or car, you would continue to make payments via phone or sending monthly checks to the lender’s “bankruptcy department.”
Chapter 13 is essentially a payment plan that you organize through the court system. Think of it as a consolidation loan with teeth.
There are 2 things you must do after your case is filed: (1) attend the meeting of creditors (aka the 341 hearing); and (2) complete a debtor’s education course via phone within 75 days from the date your case was filed. The 341 hearing is sometimes referred to as the meeting of creditors because your creditors can attend the meeting and ask you questions about the information contained in your petition.