Law Office of Timothy E. Wilfong, LLC

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Law Office of Timothy E. Wilfong, LLC

20 S. Main Street, Phoenixville, PA 19460

Reaffirmation Agreements and Auto Loans
Should I enter into a reaffirmation agreement with an auto lender?

Protect your Credit Score

Law Office of Timothy Wilfong

21 South Main Street

Phoenixville, PA 19460


Should I enter into a reaffirmation agreement with an auto lender?

You are not required to enter into a reaffirmation agreement. In many cases if you have a finance loan on a vehicle, the lender will often request that you sign what is called a “reaffirmation agreement.”  The terms of a reaffirmation agreement generally will obligate the signer to pay the original loan when otherwise the personal liability of the loan would be discharged through the bankruptcy. This is because when you receive your bankruptcy discharge the loan on your vehicle will be erased; however, the lien remains.  

In Pennsylvania a creditor in most cases may only repossess a vehicle in which a loan is in default and not on the basis of filing bankruptcy regardless of whether an individual has executed a reaffirmation agreement. In practice, even without signing a reaffirmation agreement as long as you keep paying the finance loan on the vehicle then the lender will not repossess the vehicle (but there is an off-hand chance).


However, you may choose to reaffirm a vehicle finance loan in order to help rebuild your credit.  When you sign a reaffirmation agreement, the finance company should continue to report on-time payments to the credit bureaus, which helps rebuild your credit.  Unfortunately, when a reaffirmation agreement is not in place the vehicle finance company most likely will not report your payments to the credit bureaus.  You will have to carefully consider how likely you are to default on the car loan and whether the car is underwater when deciding whether you should reaffirm the debt.


In addition, there are reasons why you would not qualify for reaffirmation.  For example, if you have negative income after expenses then you may not qualify for a reaffirmation agreement. Furthermore, the court may refuse to approve a reaffirmation agreement if the vehicle is worth less than the finance loan.


Please call for a free, no obligation, initial consultation with a bankruptcy lawyer to evaluate your specific financial circumstances to see if it makes sense for you to file for Bankruptcy at (610) 935-5555.  To ask a question or schedule an appointment please click here.

Law Office of

Timothy E. Wilfong, LLC

20 S. Main Street

Phoenixville, PA 19460

Phone-(610) 935-5555

Fax-(610) 680-3910