Cars... repo, surrender, reaffirm, ugh

[cajames]

OK... Here's the scenario...

I've got 2 cars, a 2006 minivan that I am surrendering. Here are my questions about it:
1. I live in New York, and drove it here from Wisconsin when I moved. It is financed through a small credit union (no NY branches). They want me to do a voluntary repo and drive it back. I told them to come get it if they want it. However, shouldn't I just wait and surrender it as part of the BK and not take a "double hit" on my credit report? Can I be forced to drive it back?

I've also got a 2007 Toyota that I bought the day before I filed my chapter 13. I am obviously keeping it.
1. Do I reaffirm, or just keep making the payments?
2. I have read that although "cramming-down" the vehicle no longer works (the 910 day rule), but I also read that the value-added stuff built in to the loan (extended warranty, GAP coverage, etc) is considered non-secured and that I make be able to not pay for that and also reduce my interest rate (down from 19.9%). I put it in my chapter 13 plan (pro se) that I would make monthly payments based on the full purchase price of the vehicle alone, and at 10% interest. Is that something that a trustee would go for? What about Toyota Motor Credit?

Oh yeah, for those of you worried about a car loan... I walked into a Toyota dealer and applied for a car loan with a 407 score, and walked out with a brand new car with no cosigner and no down payment. Don't ask how... I'm still in shock.

[lrprn]

I've also got a 2007 Toyota that I bought the day before I filed my chapter 13. I am obviously keeping it.

Your trustee or the US trustee will see a car purchase one day and filing the next - they are likely to file an objection regarding this purchase even if you do sign a reaffirmation agreement. It's pretty obvious that you knew you were going to file bankruptcy when you bought this car - you filed the very next day. And in your filing you are trying to get out of part of the debt you just took on. That's bankruptcy fraud. You are hanging out here a mile.

Let's say best case scenario - the trustees don't file an objection and Toyota allows you sign a reaffirmation agreement that lets you keep the car. The chances they will negotiate on this loan are very low - there's no advantage to Toyota to reduce what you are going to pay them. Because of the closeness of the car purchase and your filing, your trustee and Toyota are in the driver's seat here - not you.

Possibly having to drive a 2006 car back to Wisconsin to surrender it and worrying about the impact it will have on your credit report are the very least of your worries.

When creditors see pro se filers, especially Ch 13 pro se filers, it can open the floodgates to objections. If you haven't had your 341 meeting yet, get ready for a rough ride.

[HenriettaHen]

Hoo, you are being a little reckless, CJ.

Love is grand, but bankruptcy is serious business.

See Icarus:

http://en.wikipedia.org/wiki/Icarus

Then see : Bankruptcy Fraud

http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title9/41mcrm.htm

Have a great honeymoon. Take no money and no chances.

Tell no lies.

[cajames]

Reckless -maybe, but not fraudulent...

Thanks for the responses, however I don't feel like I am being fraudulent...

The van in Wisconsin I got saddled with in a divorce. My ex and I are so far behind in the payments (6+ months behind, but never repo'd because my ex's sister practically runs the credit union). The credit union sent me a right-to-cure, and were finally going to being repo proceedings.

That's when I went to Toyota. I assumed I was going to lose the van, and knew I needed something that was going to last throughout a 5-year bk repayment plan.

If I have to do a straight reaffirmation, no problem. My issue with renogiating is that the dealer slammed the warranty and other stuff down my throat, saying it was the only way to get the deal done because of my credit.

I will not perjure myself. I want to do the right thing. But I also feel like I needed to protect myself and my future...

Reckless, maybe...

Fraudulent, I don't think so...

[HenriettaHen]

"I want to do the right thing. But I also feel like I needed to protect myself and my future..."

We can see that. We're just a little concerned that you may be getting a little creative ... bankruptcy isn't something you should try to "game".The Trustee's job is to administer your estate, pay your creditors and DETECT FRAUD. It's not what we think - it's what the Trustee thinks.

Bankruptcy is a form of protection from complete disaster, so expect to be scrutinized if there is any "funny business".

[workinghard]

I would just say the toyota is your "replacement vehicle" because you are surrendering the van. It probably depends on the trustee and the judge. And while I'm no expert here (my case a mess too) ... but my lawyer commented when I inquired about surrendering a vehicle. He said the trustee is going to want to know what replaced it.

So, I would stick to that line of reasoning but don't count on toyota cramming down anything, especially with the 910 rule (for vehicles aquired within 910 days of filing:

http://www.bankruptcyhelponline.org/2006/10/20/what-is-the-910-day-rule-in-bankruptcy

If you want to keep that car I would bet they make you pay full price.

[phoenix44212]

I'm not suggesting anything, but if there is no attempt at NOT paying full price why would there be a problem? He had to have a care, the other was being surrendered? I agree it's the trustee's call and it seems there can be "arbitrary" but could he really have his case dismissed on this point? Sorry to seem naive but I do get his logic.

[CindyLou]

There is nothing fraud. about planning to make sure you have transportation. He can ask to pay the car outside of the BK and state it being a new purchase as the reason. Fraud is an attempt to hide money or keep money from a creditor or lying on application to get credit that you either don't intend to pay or don't pay. I don't see fraud here if he is paying this car as he signed the terms?????? As far as the other car being surrendered. It is the responsilbility of the lender to come get the car. Because at the end of the day a repo is a repo regardless of wheter you hand them the keys or whether they take it in the middle of the night. So the burden of getting the car does lie upon them. They will charge you the repo fee anyway. Those are my opinions.

[treehugger1]

One needs to be very careful here. There are potentially state law issues here. It might and can be financial fraud, if one goes out and buys an item on credit. At the same time, one stops paying other creditors. In a nutshell, if one is considered to be "insolvent," and one agrees to pass on money for a new purchase, while considered insolvent, the "payments" can be considered to be a transfer of "assets." I was warned about this when I purchased a new car back in November. Leagkl counsel stated that as long as I was continuing to make payments to other creditors and making the new car payments for a "while," it would not raise eyebrows. Always keep in mind that in some states, there are local BK laws and regulations in addition to the federal BK laws. While the federal BK laws come first, there a few state laws that trustees can abide by. The state of Oregon has stirct laws regulating transfers of any assets (cash, homes, personal property, etc) while one is considered to be insolvent. I would doubt that creditors rarely play this card, but better to be safe than sorry. Buying a new car a few days from filing if one has not been paying other creditors and had reasonable transportation may bite you. I contacted an attorney after feeling out members on this board. The attorney stated what members here stated. If it will be a few months before you file, it should be no big deal, but to file within a few days of purchasing would definitiely raise the "hackles" of the local trustee. Let us know how it all works out for you.

[sara4]

I don't think it's fraud then again I don't know I'm just glad to hear you got a car with a 407 credit score since I was worried about how I'm going to get one after my BK discharges.

Good luck, I agree with the others who said it's really up to your trustee. Try not to stress about it, at least you have reliable transporation. I'm still driving the car I'm giving up in my bankruptcy. My credit scores right now are
TU 568
Experian 545
Equifax 577

I hope I can walk in and out with a new car. Thanks for the info and I think you'll be fine with the car.

Sara4

Filed - May 2, 2007 - done
341 Meeting - June 12, 2007 - done
Declared no assets - July 9, 2007
Last day for objections - August 13th 2007
DAY 54!!!! Almost there!!!