Our statement of intention in bankruptcy said that we wanted to reaffirm our car, and they repossessed it. Do we still owe the bank money?

Maybe.

If you officially reaffirmed the debt, then yes, they can still sue you after a repossession if there is some kind of deficient balance after the auction, but only if you “officially reaffirmed” it.

statement-of-intent

When you file bankruptcy, you file a document called “Official Form 108, Statement of Intention for Individuals Filing Under Chapter 7.”  In this document, you can notify your creditors regarding your intentions with leases (like cell phone contracts and apartments) and on secured collateral (like homes and cars).  You can check boxes that state that you will surrender/retain the property or assume/reject your lease.  However, this Statement of Intent doesn’t bind you.  It gives your creditors warning on what you’ll probably do, but you can change your mind.

If you really want to reaffirm a debt, then you have to sign a reaffirmation agreement, have your attorney sign it, have the secured party (bank) sign it, and then the bank will file it with the court.  If you don’t do these steps, then the debt is not reaffirmed.

Checking the box on your original Statement of Intent does not count.

I had a client call me yesterday who had been reviewing her bk paperwork from a year ago (yes, she’s very thorough).  She had checked the “reaffirm” box on her original Statement of Intent, but never reaffirmed the debt and had surrendered the car.  She was now worried that she had somehow reaffirmed the debt and was facing an imminent lawsuit.  I reviewed the paperwork and the docket, and she did not officially reaffirm.  I was happy to tell her that no lawsuit was coming; she was safe.