What would be a good strategy ?

[gak555]

Assume that a Chapter 7 is discharged and that a person does not reaffirm an auto loan, but keeps the payments current. Let's say that 2-3 months later the person stops making payment on the automobile because they are just too high. How long does it normally take before they repossess the car, and if they do is it difficult to purchase a less expensive car (at a higher interest rate) ?

[lrprn]

How long does it normally take before they repossess the car, and if they do is it difficult to purchase a less expensive car (at a higher interest rate) ?

Before bankruptcy is filed, most car lenders will start repossessions in motion after two missed months of payment. However, since this car is listed in your bankruptcy and if your case isn't officially closed yet, the lender will have to wait to repossess until the case is closed or make a motion to the court to lift the automatic stay to repossess the car. If your case is discharged and closed, then the two month guideline is again a good estimate of time before repo.

If you are certain you are going to stop your payments, rather than waiting for the repo man, you can notify the lender yourself in writing to tell them the car is theirs, come pick it up.

No matter what, because you didn't reaffirm, you don't owe the lender any shortfall after the car is sold at auction.

It's hard to know what offers you might get after filing bk and surrendering or allowing your car to be repossessed. Some of our members have had excellent luck finding decent deals out there. Ford seems to be a good option lately. From advice given here, sounds like in your situation it's best to ask for the finance person at the dealership and talk to him/her directly rather than going through a salesperson. Another option is to find your own financing - sometimes a local credit union will give you decent rates as well.

[HHM]

Actually, I don't think the finance company has to wait for the case to "close", they only need to wait until after discharge. I am pretty sure they can repossess on their normal time line after discharge (actually, since you did not reaffirm, they might more a little faster to repossess).

First question, you have worded your question as a "hypothetical"...what is actually going on here. Is this something you "plan" on doing, or is this something that has already, or is about to happen. This is not a course of action I would generally recommend. If you can "afford" the existing car payment (assuming its not totally outrageous), then you are usually better off keeping the car.

As far as buying a car "just" after BK, the rule of thumb is you need SOME CASH to put as a down payment regardless of how crappy the car is or how high the interest rate. Also too, you will probably be spinning your wheels if you try to visit tier 1 car dealership (i.e. the manufacturer franchise dealerships), you will need to visit the 2nd tier and shadier 3rd tier dealerships.

Visit a site like www.bankrate.com to view interest rates and use their payment calculators and "how much car can I afford" calculator to get an idea of what you might be able to afford. You will also want to find out how much insurance you will have to pay for the car and possible up keep costs.

Depending on the type of car you drive now and your current payment, you might not actually save that much money because your interest rate is going to be significantly higher, and the length of the payment (term) is usually shorter on used cars.

[tiredofit]

good strategy???

this is what happened to me:

had an older car that still have a few years left on the note but high mileage, that i put on it since new. wasn't sure it would last till i could qualify for a loan in a couple years...

i decided to stop payment on it. they repoed it about 1 month before my discharge or so after the stay was lifted, about 2 months into the bk or so..

Before that happened and before i filed bk7, i bought a brand new car, a honda. good rate..... i kept that through bk and didn't reaffirm it though.

4 months after my discharge, i decided i didn't want it any more. it was not what i wanted and i wanted something better. i called honda and they drug their feet but finally picked it up about 2 mos later... before i called them, i was able to get a 9.5% loan on a new 4x4 truck. i had to put some money down etc, but i got what i want. i filed bk mainly because the ex put me in debt bigtime and the divorce...

bk was a godsend..... i had -300/month left over every month to pay for gas and food before i did file.. that's 300 negative.... there was no way to get around this. i needed a good car. i wanted a car i can enjoy, and i ended up with both, my payment is actually lower for the 4x4 than the honda......

thankfully..