returning car before filing

[shelly66]

I will be filing on July 15th because my husband had to wait 4 years. Anyway we are letting one car go, my attorney said I could continue to pay for it or I can gamble and not pay but they probably come get the car before july 15th. I am due now for my payment for april 24th, which I am not going to pay. We need to have money for other transportation so we don't want to waste the money on the payment. My question is ehat happens to loan if it is repo'd before july 15th.?

[StartingOver08]

Then you have a repo showing on your credit report and a BK. Two separate events rather than one event.

The repo can still be discharged (the deficiency part) in the BK.
If you are going to go this route, make sure you take your personal stuff out of the car. When the repo man comes, take your plate off the vehicle. Another poster in here had issues with the DMV after the repo.

[justbroke]

If it's repo'd before July 15th, then the deficiency (the amount between auction and your balance) will be considetred "unsecured" debt and the creditor an "unsecured" creditor. That debt will subject to discharge in the Bankruptcy.

If you end up in a 100% Plan, you will pay back 100% of that "deficiency" over the life of your Plan. If you're in a less than 100% plan, you'll be paying pennies on the dollar. Better yet, if you're in a 0% plan, you won't pay anything.

The bottom line is, that the lender will be treated as an unsecured creditor and will be paid at the same rate as other creditors. that payment is based on your so-called "disposable monthly income".

[shelly66]

I understand but what happens to that payment that was on the expense sheet? It was checked off that I would be returning the car after we file. So should I still pay to keep it temporarily or let it go to save money?Not sure.

[justbroke]

I understand but what happens to that payment that was on the expense sheet? It was checked off that I would be returning the car after we file. So should I still pay to keep it temporarily or let it go to save money?Not sure.

That's a "strategy" question and a good one for legal advice.

Some have kept the car so that they could keep the payment as an expense, but surrender it in the Bankruptcy (by indicating such on the Statement of Intentions). However, some Trustees catch this and want Schedules I&J redone removing the payment. This is where knowledge of the local District and Trustee rules comes into play, and a good lawyer knows how to do this, if you really need it for purposes of the means test.

[sassiebaz]

This is why we are avoiding the repo guy. We'd like to hold out until we file. Then get the automatic stay. It sucks looking over you shoulder constantly though! Looking out the front door, scanning the neighborhood as we come and go. I feel like a criminal!

[shelly66]

My husband doesn't want to keep paying for the car if I am turning it in. We can share a car until we can pay cash for another one. We will need another car or means of transportation soon after it is gone because we both work.

[oii]

I'd stop paying on the car, drive it for two weeks, then leave it outside, unlocked, with no tag on it. If the repo company doesn't get it then, the police will tow it and the repo company can get it from impound. You'll feel good knowing you helped a local towing company earn some money. You'll have that debt unsecured (since they got their security interest back) and they will have an incentive to sell the car at auction to pay down the amount owed.

You are in FL, land of cars with no state inspection. It will not be hard to find something cheap for cash. I'd recommend a white 93-97 Intrepid with the 3.3L engine. Good Florida car (strong AC, equal to a 2 ton home unit in BTU power) and CHEAP! Cost me $450 in parts to change both head gaskets on one 2 years ago. Was easy to do and a good learning experience, too!

[lrprn]

My husband doesn't want to keep paying for the car if I am turning it in. We can share a car until we can pay cash for another one. We will need another car or means of transportation soon after it is gone because we both work.

Shelly, your husband is thinking short-term, not long-term. Paying 1-2 more car payments now will make surrendering the car during your bk when you do file much cleaner. It's a few hundreds of dollars to get rid of thousands of dollars with no strings attached and no extra hit on your credit.

Discuss what's best to do in your specific situation with your lawyer. Then follow his/her advice.