Question about car

[KellyBerg]

I'm getting ready to file Chapter 13. Can I surrender my car which is worth about $10-14K less then what I owe on it, in to the bank and buy a new one before filing?
If not, can you tell me what you recommend?
I'm paying about $600 a month for a car that is a 2005 and I can get a 2008 for the same monthly payment. What happens to the difference between what I owe and what it's worth. Please help! I'm waiting on an email from my attorney but I'm not sure what he'll tell me and it'll be tomorrow! I can't wait....thank you for your consideration :-)

[klux]

I am curious on the same thing. Do you owe it to a bank or a credit union? When did you purchase it?

[KellyBerg]

I purchased it in June of 2006 and refinanced in October of 2006 at 7.9% from Capitol One Auto Finance. I'm filing in a few weeks. I want to know if I can turn in this car, have the difference be unsecured and buy a new car before I file???

[KellyBerg]

Anyone?

[rrockinggramma]

when we filed our first chapter 13 we bought a new car about 2 weeks prior. It was on the advice of out attorney so we would have a decent vehicle make it through the plan. I definitely recommend talking to your attorney. the only question by the lenders we talked to was why we wouldn't be "trading in " the other vehicle. Those questions were a little awkward at times because we didn't want to let anyone know that we were filing in less than 2 weeks. As to Klux, you have several vehicles. Our trustee and attorney told us only 1 vehicle per driver (adult) in the household. So I would be talking to your attorney and then make your decision.

[Flamingo]

I purchased it in June of 2006 and refinanced in October of 2006 at 7.9% from Capitol One Auto Finance. I'm filing in a few weeks. I want to know if I can turn in this car, have the difference be unsecured and buy a new car before I file???

Probably not as a transaction such as you are suggesting just prior to filing BK will probably not be favorably viewed by a trustee and I don't believe what you are suggesting as to "have the difference be unsecured" is possible. Your attorney may be able to cram your vehicle into your Chapter 13. It's probably best that you go over this situation with your attorney who knows your finances and situation exactly.

[KellyBerg]

I can't cram, I already know this. I haven't had the loan for more then 910 days. If I tell them I want to pay the difference into the plan ( between what it's owed and what it's worth ), do you think they'll do that?

[KellyBerg]

I'm not worried about the lenders. I already got a blank check from cap one approved. I'm worried about my upside down negative equity.

when we filed our first chapter 13 we bought a new car about 2 weeks prior. It was on the advice of out attorney so we would have a decent vehicle make it through the plan. I definitely recommend talking to your attorney. the only question by the lenders we talked to was why we wouldn't be "trading in " the other vehicle. Those questions were a little awkward at times because we didn't want to let anyone know that we were filing in less than 2 weeks. As to Klux, you have several vehicles. Our trustee and attorney told us only 1 vehicle per driver (adult) in the household. So I would be talking to your attorney and then make your decision.

[KellyBerg]

Ok, I just found this post but gramma, can you elaborate? How do I go about doing this?

08-20-2007, 02:51 PM #18
rrockinggramma
Registered User
B/F Guru


Join Date: Aug 2004
Location: michigan
Posts: 158 well our finance company was a credit union and of course they weren't happy about it but the difference is totally discharged in your BK and they can't do a thing about it. I think we owed like 14,000 on the F150 and only had to finance about 8,000.00 It was a huge help for us because even with the BK we had a really tight budget since we hadn't been paying on anything unsecured anyway in a long long time. So the 50.00 it saved us in payments really helped us out. And our lawyer was so pissed at the credit union anyway that his comment to us was "we are going to get those f----------" LOLOL and he did!

[Flamingo]

I can't cram, I already know this. I haven't had the loan for more then 910 days. If I tell them I want to pay the difference into the plan ( between what it's owed and what it's worth ), do you think they'll do that?

Did you ask your attorney if you can do that? Remember, when filing BK, it's not what yu want to do, it's what you can do. I know it's all so totally confusing. We had two vehicles crammed into our 13 which were 3 years old at the time of filing. Our Plan was for 5 years. We had sleepless nights hoping the vehicles would hold out that long and had nightmares about how we would pay for expensive repairs. Always ask your attorney as to what you can do for your particular situation due to your finances involved. He/she will always work with you and give you the correct options as there are restrictions to what can and cannot be done.

[HHM]

The difference between what you owe and what the car is worth, if your SURRENDER the car, becomes a general unsecured debt in your Chapter 13 and gets paid accordingly.

[KellyBerg]

Ok, but can I buy a new car before I file? If I do, I'll technically have 2 cars. How do I time this? Yes,I emailed the attorney and havent received a response but his paralegal said he is swamped and will get back to me as soon as he can. It's been 2 days now.
I'm not worried so much about finances. My pay is up and down ( I work on commissions mostly and have some great pay periods and some average ones) My last 6 months weren't so great but I have a LOT of things "pending". I don't know if they'll go through or not but I told my attorney and he said the trustee doesn't look at a thing after the plan is confirmed so I should be in great shape. I would just love to get out of the vehicle I'm in, turn it in and then buy a new one, but if I put the new one in the plan, will they lower the rate to the 7% that my attorney told me they would charge or would they frown upon it because I just bought it before BK?

The difference between what you owe and what the car is worth, if your SURRENDER the car, becomes a general unsecured debt in your Chapter 13 and gets paid accordingly.

[KellyBerg]

Also, I told everything to my attorney regarding my pay and he understands how up and down it is. I just looked at paystubs. I get paid every other week ( for 2 weeks ) and March I had ( and this is gross ) $3900 and $1100 ( so $5,000 for the month ) April I had $5200 and $3500, May I had $1350 and $1120, and $1300 ( I had 3 pp in May ), June I had $1300 and $1500, July I had $1600 and $1125 and August I had $3550 and $1100.
My payment he said would be about $950 a month including my car. I'll have plenty left over if I have a good month. I don't own a home or have children ( or a hubby ), so I can eat sketty o's if I have to. Anyway, I really would like to dump my car and get a new one so I can stay in it the whole 5 years. I've never had a car longer then 3 years so this will be new for me! I always get a brand new car. I used to lease but have bought the past 2 years.

Anyone have any advice? Thank you kindly!! I really do appreciate this forum =)

[rrockinggramma]

we did what I said in the post because of a 722 redemption loan which is available only for chapter 7 filers. However, if you surrender a vehicle, then the difference is scheduled as unsecured debt and your creditor would simply file a claim for that amoun and they would receive the same percentage as the other unsecured creditors in your case. In our lucky instance, in my chapter 13, no claim was filed for the deficiency balance so they ended up getting nothing. (I filed a chapter 7 in 01 discharged and then a chapter 13 in 05, let car go back in chapter 13 and refinanced truck in chapter 7 with 722)

[KellyBerg]

so you had a chapter 7 6 years ago and then a chapter 13 recently?
then another chapter 7?

we did what I said in the post because of a 722 redemption loan which is available only for chapter 7 filers. However, if you surrender a vehicle, then the difference is scheduled as unsecured debt and your creditor would simply file a claim for that amoun and they would receive the same percentage as the other unsecured creditors in your case. In our lucky instance, in my chapter 13, no claim was filed for the deficiency balance so they ended up getting nothing. (I filed a chapter 7 in 01 discharged and then a chapter 13 in 05, let car go back in chapter 13 and refinanced truck in chapter 7 with 722)