Relinquishing a vehicle that was not reaffirmed in Chapter 7
Question Details: We want to relinquish our van to the lender and it was not affirmed in Chapter 7 that was discharged 2 years ago. Will this show up on our credit and will it prevent us from buying another vehicle?
If the loan was not "re-affirmed" in your bankruptcy, then turning the van in should not have any affect on your credit report. Typically, in such cases, the lender stops reporting payments to the credit companies at time of discharge. The reason is that borrower is no longer personally liable for the debt. While the lender can still repossess the vehicle for non-payment they can no longer hold you liable. So, for example, if the car is turned in and then re-sold sold but for less than what is still owed on the loan, the lender cannot look to you to make up the difference.