Buying a car during ch 7

[jason0618]

I've read several posts here about people buying cars during bankruptcy, or days after, even with previous repos, but how am I supposed to save money for a down payment? My attorney advised me that since my wife and I are both not affirming our cars (both are 2008 models purchased with $0 down, so we're negative) that the lender, GMAC, will probably file to have the stay lifted, which would mean they'd be able to come get their cars before the discharge. He also said we should not have more than few hundred in the bank accounts. If we're going to lose our cars before discharge, and won't have much money available for downpayments, what are my options? Granted, I've only got a 12 mile commute to work, but I'm certainly not going to walk or ride a bike. I don't live in an area where I could just take the bus for a couple of months, either. Basically, I need a car. It's not a desire, or a convenience, it's a necessity. I've looked around, and believe I've found an ideal car for myself--2003 Toyota Solara with 56,000 miles, and asking price under $10K. Obviously, it's a far cry from the 2008 car I've gotten used to the past 7 months, but stuff happens. I've accepted that.
Thanks for any advice you can give me.

[emoney]

Without knowing your budget, but with two new cars and you filing for BK I belive it is safe to say you cannot afford your taste in cars.
One thing to consider is to keep the cheapest car. One other thing is to buy one at a "We tote the note lot". This means bad cars and bad terms, but you are desperate.
I'm sorry that I did not have any better ideas for you.
regards,
emoney

[HHM]

Are you behind on your car payments?

If you are not behind AND if you can afford it, you should keep making your car payments. Although it is possible that GMAC will want the cars back, it is not a guarantee. Most car finance companies will allow you to simply do a ride-through, i.e. whereby you simply keep making payments. (even though you did not reaffirm).

Your best course of action is probably to keep making the payments, and cross the bridge of "buying another car" if you come to it.

[infrontofus]

I can tell you that trying to buy a car before discharge is nerve-wrecking. If you can hang on, do it. Plus, if you have been current on payments, that's a positive trade line on your credit report.
I just had to get my mother to finance a car for me because we couldnt get financing on our own. We are about 35 days (hopefully) to discharge and our family vehicle is going this week because the lender asked for the stay to be lifted so they could reposess it. Again, I had to ask my Mom. I am 38 years old. That was not an uplifting conversation. Our families have been very supportive but "Hey Mom, we're bankrupt, losing our house and I wont have the truck to cart around your grandchildren in a week. Care to buy me a car?" is something I never would wish on anyone.

[Bobbi]

i purchased my car feb 1st, less than 2 weeks after i filed. my trustee was aware of it, since a lift of stay had been filed on my car and i could not afford the payment. i got financed thru prestige financial, and my note is less than half of my old car, at an interest rate of 17%. they originally said it would be 21%, but we landed 17 because we had one car on our credit paid off in full from last year.

i highly recc them, and they have rate reduction, so as long as i pay on time and keep full coverage insurance, i get a half percent drop on the interest every 90 days. Also, I plan to refi sometime in the late summer, once our scores are in line with a lower rate. hth's


ETA.....reaffirming your car does NADA for your credit. They still zero it out on your credit and then once you reaffirm, they don't report it anylonger, it still reads included in chapter 7. a new vehicle will report as anew trade line on all three and this bank works with you to make sure you keep your stuff in line, letting you pick the due date , etc...

[CindyLou]

could you keep one and let one go?

I had a car financed through Ford Motor Credit that I purchased approx. 6 months before filing. I purchased another 2 months after my discharge. I let the first one go back and it did not affect the second. My point being that it may not be all or none.

[jason0618]

Are you behind on your car payments?

If you are not behind AND if you can afford it, you should keep making your car payments. Although it is possible that GMAC will want the cars back, it is not a guarantee. Most car finance companies will allow you to simply do a ride-through, i.e. whereby you simply keep making payments. (even though you did not reaffirm).

Your best course of action is probably to keep making the payments, and cross the bridge of "buying another car" if you come to it.

Well, at time of filing, we were not behind on our car payments, but our attorney recommended strongly that we not reaffirm the cars due to the huge negative equity situation we're in with both vehicles. As an example, my car, a 2008 Saturn Aura, has a payoff balance of $27,000. This is on a car that stickered for $21,000, and is now worth about $16,000 private party. My wife's vehicle is worse than that. Basically, we traded in cars that we owed more on than they were worth on these cars. Our credit situation was such that we could basically do what we wanted, and the bank didn't sweat the details. Then came the difficult times, and we've drained our savings in an attempt to keep afloat. Unfortunately, lenders are caring as they can be about hard times, so long as they're getting paid. So, anyway, bottom line is, no, neither of our cars are current at this time.

[krielly]

ETA.....reaffirming your car does NADA for your credit. They still zero it out on your credit and then once you reaffirm, they don't report it anylonger, it still reads included in chapter 7. a new vehicle will report as anew trade line on all three and this bank works with you to make sure you keep your stuff in line, letting you pick the due date , etc...

Not necessarily the case.....depends on the lender. We're in a 13, and kept our camper and a truck. We didn't even re-affirm, and the lenders for both still report on time payments............

[Bobbi]

Not necessarily the case.....depends on the lender. We're in a 13, and kept our camper and a truck. We didn't even re-affirm, and the lenders for both still report on time payments............

the question was regarding a chapter 7, NOT a 13. In a chapter 7 case, reaffirming a car does NADA for your credit.

[krielly]

the question was regarding a chapter 7, NOT a 13. In a chapter 7 case, reaffirming a car does NADA for your credit.

That's interesting.....I don't see why this would be any different. A car loan is certainly dischargeable if you plan to surrender it, whether you are in a 7 or a 13, it makes no difference as to whether or not you can walk away from the car..........You either pay for it, and keep it, or surrender it. 7 or 13, it's the same situation.

I really believe this is individual to the lender, personally.

[Bobbi]

That's interesting.....I don't see why this would be any different. A car loan is certainly dischargeable if you plan to surrender it, whether you are in a 7 or a 13, it makes no difference as to whether or not you can walk away from the car..........You either pay for it, and keep it, or surrender it. 7 or 13, it's the same situation.

I really believe this is individual to the lender, personally.

\ACtually, if you have the money to pay off a car in chapter 7, you will probably end up in a 13. reaffirming your car, is making a new contract, exempt from the chapter 7 case. it isn't surrendering. if you surrender, the balance is discharged, if you reaffirm, it is not. with a reaffirmation, it does not open a new trade line, it just continues the current contract under different terms. the creditor is not required to list that car with a positive pay history. a majority keep it listed as included in bankruptcy, and it gives you no new credit once you discharge. the key to building positive credit after a discharge is to open NEW accounts with all positive trade lines, showing you have re-established. Paying on a note from before the bankruptcy may be great and all, but it is not in the key steps to rebuilding.....

in a 7, you are usually discharged within x amount of months, whereas a chapter 13 takes up to 5 years, and you must make payments each month. in that case, it is harder to take on a new trade line, because you owe "x" amount to your creditors. Chapter 7 erases that debt. There is a huge difference between the two. Once the chap 13 discharges and closes, you may end up with a higher score, because you paid it all back, BUT you still must obtain NEW credit, not rely on an old note from during the chapt13 case. it will be listed as satisfied in bankruptcy, etc....and does your no good when it comes to a fresh start

[krielly]

\ACtually, if you have the money to pay off a car in chapter 7, you will probably end up in a 13.

Actually, many folks keep their cars in a 7. Depends on the equity, and whether or not you can exempt it. Just because you can afford a car payment does not mean you will be forced into a 13.

reaffirming your car, is making a new contract, exempt from the chapter 7 case. it isn't surrendering..

I'm aware of the difference, thanks.

the creditor is not required to list that car with a positive pay history.

No creditor is required to list ANY loan with a positive pay history

a majority keep it listed as included in bankruptcy, and it gives you no new credit once you discharge. the key to building positive credit after a discharge is to open NEW accounts with all positive trade lines, showing you have re-established. Paying on a note from before the bankruptcy may be great and all, but it is not in the key steps to rebuilding.....

New trade lines are important, yes.....but a history of on time payments and long standing accounts are also important.

in a 7, you are usually discharged within x amount of months, whereas a chapter 13 takes up to 5 years, and you must make payments each month. in that case, it is harder to take on a new trade line, because you owe "x" amount to your creditors. Chapter 7 erases that debt. There is a huge difference between the two.

I never said there was no difference between the two plans. Being 31 mos into a Chapt 13, I'm well aware of the difference, thanks. What I said was that it is up to the lender as to how they wish to report (or not) and this was not set in stone based upon what chapter you file, and whether or not you reaffirm. I just hate to see blanket statements made from folks about situations that can vary from case to case, lender to lender. You should be careful about making definitive statements, but simply referencing your own personal experience.

Once the chap 13 discharges and closes, you may end up with a higher score, because you paid it all back, BUT you still must obtain NEW credit, not rely on an old note from during the chapt13 case. it will be listed as satisfied in bankruptcy, etc....and does your no good when it comes to a fresh start

We are in the middle of a 13, and just got a vehicle loan. As part of the consideration to loan to us, they looked at the fact we had been on-time on our other loan and our 13 payment. So, in our case, while it was not establishing "new" credit, it certainly was helping us.

[Bobbi]

Actually, many folks keep their cars in a 7. Depends on the equity, and whether or not you can exempt it. Just because you can afford a car payment does not mean you will be forced into a 13.

you said pay off, not keep a car note. i agree there is a difference;) if a person simply pays it off, and doesn't continue a note, then, um, why isn't the trustee taking that cash to pay creditors?






No creditor is required to list ANY loan with a positive pay history

you are correct, they are not. a creditor that hasbeen included in a bankruptcy is going to list just that.......i have not seen anyone say their finance company reported positive pay history on a note that is reaffirmed in a bankruptcy, and i looked for a long, long time before i even filed. as far as equity and what not, i agree, in some cases it is best to continue and stick the note out, so you pay it off and own it.....but in alot of cases, you are upside down, as many are in any newer vehicle, and from a credit score perspective, it is better to have a new trade line that says, yes, this person is paying on time and yes this person is getting it right, versus paying off an upside down note, and all you have to show in the end is a car, but no reflection on your credit history.



New trade lines are important, yes.....but a history of on time payments and long standing accounts are also important.on time payments on a car reaffirmed during a bankruptcy do nothing for your credit. paying your new trade lines do, and previous paid off cars do, but not one included in the bankruptcy......unless creditors have changed their standards overnight.




I never said there was no difference between the two plans. Being 31 mos into a Chapt 13, I'm well aware of the difference, thanks. What I said was that it is up to the lender as to how they wish to report (or not) and this was not set in stone based upon what chapter you file, and whether or not you reaffirm. I just hate to see blanket statements made from folks about situations that can vary from case to case, lender to lender. You should be careful about making definitive statements, but simply referencing your own personal experience.never said you didn't know a difference, please ask before assuming i am referring to any lack of knowledge you may or may not have, i do not know you, and have no reason to assume you do or do not know something. thanks.



We are in the middle of a 13, and just got a vehicle loan. As part of the consideration to loan to us, they looked at the fact we had been on-time on our other loan and our 13 payment. So, in our case, while it was not establishing "new" credit, it certainly was helping us.

being over half way done in a chap 13 is great, i am sure it looked good, as did the pay history before the chap 13........i had two paid off cars, one in 07, and that is what helped us with our vehicle. i did a surrender on the car i was in and purchased a new one because it was upside down and would do me NO good in building new credit......and i did not want to vest all that cash into a car over the next 5 years and have it mean squat when i go in to get another car later on down the line. if that makes sense.

[krielly]

I guess we can agree to disagree........

[HopeFaith]

My Husband and I both got approved for a purchase at a dealership, the day after our 341 meeting which was a few months before discharge. We had both of our cars repo'd a month before filing, and it was reported to the bureaus before we got new financing. We had trustee approval, because we each did not have a vehicle and were sharing a rental car. Here are the details;

2007 New Car $14,500 Loan Amount
20.99% Rate for 6 Yrs
Zions Bank - Dealership got us financing

2007 Slightly Used Car: $14,500 Loan Amount
20.99% Rate for 6 Yrs
Zions Bank - Dealership got us financing