PLEASE HELP! I reaffirmed auto in Aug '08 discharge

[Miss5Eleven]

Well, I now realize I made a mistake. I reaffirmed my auto in my Chapter 7 and now I regret it. I wish I knew of this forum then; my lawyer gave me no guidance. Anyhoo, I REALLY want to trade it in for a cheaper car. Unfortunately, I'm $10,000 upside down. If I do a voluntary surrender, does anyone think that I can secure a loan before I let it go? (I live in Illinois and my lender is SST/E-Loan) Would I most likely owe my lendor the $10,000 difference (if it comes out to that when they auction it off). How would I pay that off? Do they accept payments? I tried refinancing but was unsuccessful. I've even considered some type of loan modification but they sound too shady. Please, can anyone give me advice? I really need a car and need to reduce my monthly payment to about half. Thanks so much!!!

[ROB37LAW]

Unfortunately since you signed a reaffirmation agreement you're responsible for the difference between what you owe and what the car sells for at auction. It will sell for considerably less than it's retail value. Hence you will probably owe more than 10k. A "voluntary surrender" will still show as a repo on your credit report. If you attempt to finance another vehicle prior to the repo than your current car loan will be factored into your debt to income ratio.

My only suggestion...possible cram down in a chapter 13.

[justbroke]

Yep, that's a non-starter. You'll either have to trade it in with the $10,000 "negative equity" added to the car or try just getting another car before and without trading it in. Even if you did the negative equity thing, I think it's going to be difficult because your LTV is going to be REALLY high and most lenders don't like LTVs over 125%.

I can't believe that your attorney let you reaffirm a car with $10,000 in negative equity. Amazing.

[LSUTiger32]

Here is my suggestion because I just don't see that you have an alternative.........

First, you have got to get out of the mindset of needing a car equals a car payment. Do you have any savings whatsoever? Whatever you can scrape together between now and when they come and get the car is what you will have to buy a beater. Do NOT finance another car.....have you not learned anything from keeping it through BK and now STILL being in this situation?

As far as the car they will take with $10,000 negative equity, they will sell it and yes you will owe it. I suggest letting them simmer for a while and as soon as you get you a little beater car start socking money away to deal with this. You will be able to settle it with them for much less than the actual balance.

I understand as you said that you really need a car, most of us do. What you do not need is your payment cut in half, you need it cut period.

[aces67]

If you let it go back you will owe the difference and they may or may not be willing to make a settlement offer with you. They know you can't file Ch 7 again so they know you will have limited options.

How much do you owe on it total?

[AngelinaCatHub]

I've been out of town for two weeks and your post grips me badly. One of few I have seen.

You are correct, your lawyer should be drawn and quartered for allowing a reaffirm when you could have "paid through". You are stuck with a possible Judgment that will haunt you.

NOW! My opinion if I were you. File a 13 as "JustBroke" stated. It is called a chapter 20 (7 + 13 ) and get onto a plan that would lengthen the payments. Once you file, you will get a very short stay to evaluate your bk13. Make the payments under this plan and NEVER purchase a car again with unpaid equity. It will get you every time.

JB, please chime in on this for me as I think the OP has no other choice. Damn those lawyers that will not "educate" folks in panic and stress.

'Hub

[Flamingo]

Be careful what you do here. You have a Chapter 7 filing on your credit reports in mid-2008. If you fle Chapter 13 you are going to have two bankruptcies showing on your credit report - you probably will not be able to get any credit whatsoever and if you do, the rates/fees will rival Pluto's orbit. The same would occur if you let them repossess the vehicle - a BK and a repossession on your credit report is also very bad. I would suggest you do what you need/have to/can do to get out of this and hunker down for a few years to ride out the storm and try to stay away from credit and loans for several years to allow your credit to come back if you do file another BK or the car is repossessed 1 1/2 years following a Chapter 7 discharge. I'll bet you went out just before you filed and brought that brand spanking new top end vehicle which was way out of your league but you thought you could really afford and couldn't live without...now it has you under its control.

[justbroke]

The problem with a Chapter 13 in this context, is that the debtor can't receive a discharge, so it really won't do anything with a deficiency judgment.

For what it's worth, I would go and double-check that the reaffirmation was actually filed before the bar date for discharge (60-days after the first scheduled 341 Meeting). I'm not saying that they messed up, but if your reaffirmation was filed after that point... you'd be the luckiest person on the planet.

Maybe the attorney checked the "undue hardship" box as well. if so, then it required a review by the Bankruptcy Court Judge to be approved! Without this approval, the reaffirmation is void as well.

I really have no suggestions. This is just one of the cases that clearly shows why you shouldn't reaffirm any debt where the debt is under-secured by the collateral.

[Miss5Eleven]

Thanks so much, everyone, for your help.

[Stilltheone]

Well, I now realize I made a mistake. I reaffirmed my auto in my Chapter 7 and now I regret it. I wish I knew of this forum then; my lawyer gave me no guidance. Anyhoo, I REALLY want to trade it in for a cheaper car. Unfortunately, I'm $10,000 upside down. If I do a voluntary surrender, does anyone think that I can secure a loan before I let it go? (I live in Illinois and my lender is SST/E-Loan) Would I most likely owe my lendor the $10,000 difference (if it comes out to that when they auction it off). How would I pay that off? Do they accept payments? I tried refinancing but was unsuccessful. I've even considered some type of loan modification but they sound too shady. Please, can anyone give me advice? I really need a car and need to reduce my monthly payment to about half. Thanks so much!!!

I am in the EXACT EXACT same boat as you. We filed early '08, reaffirmed a Cadillac Escalade (which at the time was "valued" at $24K--we owed $20K) Once gas prices hit $4/gallon, our value tanked.

We looked into getting a cheaper vehicle, but have owed more than what it's worth for almost the last 2 years. We currently owe $13900 on an '03 with 125K miles on it. Worth that in trade??? HECK NO.

Everytime we would try to "roll in" our negative equity, lenders (especially nowadays) would only go for 115% LTV---WHOLESALE value, not retail value.

Since we seem to be stuck with it, we just keep making our payments and are halfway done with the loan.

Had I known then what I know now, I NEVER EVER EVER would've signed that reaffirmation agreement. Oh well, live and learn.