Too easy... wish I'd known sooner!

[bella8286]

Long story short, I leased a 2009 Honda Accord in October 2008 the month before filing Ch. 7 thinking I'd be unable to get anything for years and needed a reliable car under warranty. Kept the car and have been making payments of $550/mo (had 8k neg equity in it) with no help in rebuilding my credit.

After reading these boards I realized I was under no financial obligation to keep the car and could simply give it back if I wanted. Called Honda bankruptcy department and could not believe how easy it was. She told me I will not be responsible for any balance and it will be reported on my credit as a discharged zero balance. Went to the Honda dealership yesterday and drove away with a 2010 Accord that I will own for the exact same payment. They were able to approve us through Chase and Capital One which ended up being the better deal. Interest rate 14.9% for 72 months, $1000 down.

To think I've been throwing away $550 a month to end up with nothing in the end and for the same payment, I will own my vehicle and rebuild my credit at the same time, not to mention eventually refinance and come out with a cheaper payment.

[mikemike]

whats ur credit score?

[BobMango]

...To think I've been throwing away $550 a month to end up with nothing in the end and for the same payment, I will own my vehicle and rebuild my credit at the same time, not to mention eventually refinance and come out with a cheaper payment.

I like to think of these moments as completing another course at "Woulda, Shoulda, Coulda" University.

[aces67]

At $550 a month that's $40, 600 for a CAR! To me that is just insane.

[Amy26]

Congrats! I don't think its insane and I know how you feel. Three days after discharge I purchased a 2010 ford edge at a 17.9% interest rate and last month I was able to refinance it at my credit union to 8.9%! Brought my payment down from 650 to 450, so I know how good it feels to not only have something very reliable to drive but that it will be reflected on your credit.

[6thsense]

I was also contemplating doing what you did. My second vehicle was just repo'd, but I still have and am current on my Honda Odyssey. I am debating on surrendering the Odyssey in favor of something else as a form of rebuilding my credit...as long as the terms are comparable. It sucks that the Odyssey will not get reported on my credit report as I have never fallen behind.

[jamiedavidg]

I read the other thread, detailing the terms and rates that folks were able to get after BK, to purchase a car...and when I read anything about "72 months", I keep hearing the lady from the debtor education video, telling me that it's a bad idea, lol. Rewind my life about a year and a half ago, and I was the one convincing my husband to purchase a SUV with all the bells and whistles and extend the loan from 60 to 72 months, just to lower then payment a measly $75 a month.

I need a vehicle, but it's gonna be a cheap, used but reliable car for me
Probably a Toyota or a Honda. Hey, at least I've learned a few things in the process of filing BK. Hopefully, the husband has too! LOL.

[6thsense]

Hey Jamie...I hear you...I dont think I'd ever do anything past 60mos. The SUV i surrendered was financed for 84 months. What a mistake!! It was a 2005 and wouldve been paid off in 2012...what was I thinking!!?? I'm just considering something to finance to report on my credit card. The odyssey we have will most likely not be reported. Im thinking of surrendering and get something new and get it reported to my credit records! Still contemplating though!!

[jamiedavidg]

Ouch, 84 months

It alway seems like a good idea at the time, LOL.

[Flamingo]

At $550 a month that's $40, 600 for a CAR! To me that is just insane.

Not only that, but unless the OP can refinance this vehicle at a lower rate with a BK showing, the OP will be under water for years on this vehicle. Six years is too long for any car payment no matter what one's financial status is. While it's good the OP got the transportation, there may have been better deals out there and it doesn't take much for the dealership's slick tactics to put someone in a situation like this right out of BK. That is a bad interest rate and they are making a ton of money off the OP. We were able still in an active Chapter 13 to obtain the advertised, special deals on a GM vehicle back in 2006 and got zero percent financing and/or the rebate/lower interest financing offerred at that time. We just paid off the car this past April. We did not jump on anything and shopped around and avoided the slick tactics and high interest rates. It is also a good idea to obtain a good used car for a few years and then go for something better after one's credit rating is a bit better a few years after discharge.

[brad10281]

Am I the only one here thinking that financing a vehicle for $400-$500 per month AFTER BANKRUPTCY is simply insane? I learned my lesson and bought two used vehicles after my bk. A 2007 Pontiac G6 for under $13k (paid in full) and a 2009 Ford Escape for under $20k with a $230/month payment. I wasn't even comfortable with this small $230 payment. My plan is to pay it off asap while I'm not paying a mortgage.

I can understand that everyone's financial situation is different. I had access to funds that allowed me to pay cash for one car and pay 50% down on the other. Did I make a stupid decsion by tapping into these funds? Without a doubt, yes! But I had to assess my situation and plan accordingly. If I didn't have these funds then I would have settled for a car under $10k...but I didn't want the payment. I never even looked at new cars. I now own two nice reliable vehicles and have at least $18k-$20k equity in them.

I'm not trying to start any arguments but paying $550/month for a vehicle just out of bk is just crazy to me. Maybe the only reason I have a hard time with it is because I'm now making $22k less annually than I was 1.5 years ago.

I now know what it feels like not to pay thousands of dollars to credit cards and cars and boats and whatever else there was and I like it. I view debt as the enemy and I don't want any part of it.

[rck3]

I guess it depends on your income going forward but I do agree. That situation cause us problems long ago. We had a $500/month car payment and ended up not being able to afford getting a 2nd car which sucked. Next time around we ended up with a $550 car payment but we got 2 cars for that price! I will never have a payment that much again. We had 2 2005 cars and will keep them at least 2 more years (likely no choice since we'll be filing BK next month). 1 year of no payments means we should have about $5k cash save if we do want a new car

[Amy26]

No, you're not the only one that thinks that. Many people have conveyed those thoughts. I'm not one of them, however. I think you should pay whatever you feel comfortable with.

My car payment was 650 and I just refi'd it to 450 which is much more reasonable. I have never paid 650 for a car before, but that was the only rate I could get post BK. I have since refi'd it and I'm much more pleased.

Personally, I don't mind paying interest on a car or a house to be able to make affordable payments. 450 or 650 a month is quite reasonable to me for a car payment... many people do not agree and that's fine. Now, if I needed two vehicles in my house...then I would definately change my opinion on that...but my husband and I are perfect with just 1. I'd also rather have one nice one than 2 less than desirable ones.

I also don't have a problem making payments on them for 5 years.

I also realize that most people on here think its INSANE or CRAZY or throwing money in the trash... I don't agree, but hey if you think so... go right ahead.

The only thing I don't like on here is when people post a question or ask something and immediately the responses are OMG THAT'S INSANE WHY ARE YOU DOING THAT! But that's just me.

[brad10281]

To avoid starting any wars in here I'm officially abandoning my post above. Without knowing income levels, career type or anything else about the OP I realized that I can't offer an words of wisdom. Maybe $550 to him is the same as $230 to me. Maybe there are some people reading this dreaming of owning a car while they struggle to pay a utility bill or feed their family. I guess we're all a little lucky if we're getting new/used cars.

The OP is clearly happy about his/her decision. So I say...good for you!

[Amy26]

I agree, we are very lucky. I am incredibly thankful that I went into the shower covered in dirt and came out clean on the other side.

And also, the OP wasn't really asking a question as to whether they should or should not... I think it was more of a "yay, I got a better deal" type of thing.