Is there a difference between bankruptcy and medical bankruptcy?

What is the difference between a bankruptcy and a bankruptcy with a repossession on your future credit ratings and loan possibilities?

• Answer:

  I would say the difference between a bankruptcy and a bankruptcy with a repo is not great enough for a person to keep a car they cannot afford just to maintain a slightly higher credit score. This is especially true in light of the fact that one's credit score will improve in 12 to 36 months after bankruptcy anyway, and especially in light of the fact that a reaffirmed car that one later defaults on after bankruptcy will hurt one's credit score again down the road AND potentially leave the person owing money after the car is repossessed and sold. But, this is admittedly very subjective. The bankruptcy itself will reduce your credit score by 75 to 150 points (depending on the circumstances of the case, circumstances the credit reporting agencies won't release since how they determine your score is a big secret), and I don't know how much a repo lowers your score. Certainly your credit score will remain a little higher if there is not a repo involved as well. But, if the question could be re-stated to say "Should I reaffirm (keep) my car in my bankruptcy case so my credit score doesn't drop so much?" then I would say this is highly dependent on whether one can afford the car. If one can afford the car and wants to keep it (and keeping it won't cause an undue hardship on the debtor or the debtor's family), then go ahead and keep it and the credit score won't suffer so much. If however one can't afford the car or is struggling to make payments, then keeping it just to protect a credit score that will improve over time anyway isn't worth it. And, if one reaffirms a car and then defaults down the road, that person lost their bankruptcy protection on the car and will probably get sued. I heard a trustee say (at a 341 meeting) that filing bankruptcy and keeping debts you can't afford is like taking a shower with a raincoat on, it accomplishes nothing. I think this is pretty sage advice the trustee gave. Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts, which I do not warrant, and I am not suggesting any course of action or inaction to any person.