Keep Old Car or Get New Before Chapter 13 Filing?

[afraseribm]

I have a 2004 Trailblazer, owe $11K and its only worth about $6-7K on trade-in, payment is $600 month (only have a year left to pay but I am 2 payments behind). Its over 5 years old as we bought in Fall 2003 and has 92K miles. I am not sure if I should take this car into BK13 and have it crammed down or buy a new small car and just surrender the old at filing. I also have an extended warranty that expires at 100K miles or November 12 2009, whichever comes first.

I have read so many similar topics but I am not sure what to do.

The bad part is that my credit score is like 600, very bad, so any loan I get would probably be 18-19% or more.

I almost think I should just keep the the Trailblazer and take my chances on getting another car down the road. I have read where people have gotten car loans with BK13 and some who had alot of trouble getting that done.

Thanks.

[holycrap]

Turn it in

You may be better served to drop the car off at the dealership and call it a voluntary repo. Include the negative equity in the CH13 and go get a new car as soon as you drop the old one off.

Your credit score may be low and you will probably have a high rate, but you will also have a new car for ypour 5 year plan and most likely not have a higher payment. Get a hyundai for 22K and your payments will be ~500.

I know it seems counterintuative, but a repo actually lowers your car payment and lowers the chance that you will have high cost car issues in the near future.

[dscurlock]

I have a 2004 Trailblazer, owe $11K and its only worth about $6-7K on trade-in, payment is $600 month (only have a year left to pay but I am 2 payments behind). Its over 5 years old as we bought in Fall 2003 and has 92K miles. I am not sure if I should take this car into BK13 and have it crammed down or buy a new small car and just surrender the old at filing. I also have an extended warranty that expires at 100K miles or November 12 2009, whichever comes first.

I have read so many similar topics but I am not sure what to do.

The bad part is that my credit score is like 600, very bad, so any loan I get would probably be 18-19% or more.

I almost think I should just keep the the Trailblazer and take my chances on getting another car down the road. I have read where people have gotten car loans with BK13 and some who had alot of trouble getting that done.

Thanks.

have you considered the fact that you may not even be able to get a new car?? I earn 100k year, and my scores are just above 650, and i was turned down due to the fact of an existing car loan...a year ago, it would have been easy, but now-a-days credit companies have tighted their belts...I was looking at a $10k vehicle, and they wanted like 90-95% down...I even
offered them $2k down, and they still rejected the offer...

before you even consider giving up your car, you should find out if you would even be able to get another one...once they find out you have a repo, then you would surely be denied on that fact...

[liz417]

I would say yes, try to get a new (slightly used) vehicle before you enter into your ch 13, you'll need something to last the duration of you ch 13 repayment plan. Last year I was planning on a ch 13, my Fico was low, about 560-600 (I was current never late on my credit cards) and it was difficult to get a loan. I finally got a loan at 6% (not bad) for a '07 Honda Civic, but times have changed in the last year...as 'dscurlock' has stated, lenders are tightening their belts in this economy.

Good Luck!

[pcn]

My mind was already formulating my response as I read through the responses, but dscurlock beat me to it. He has it exactly right. Been there, done that. Get approval for the new car before you do anything with the old. My score was in the 650 range, but the dealers wouldnt give us financing either due to debt to income ratio. You will need a car, so don't give up what you already have until you have a replacement "in hand". (FWIW, The dealer did say that with a 10k downpayment we would have been approved for the 24k new Edge we were looking at. )

[campinmin]

If you have not proceeded with anything yet...dont buy new! 1) If you are filing chptr 13, you will need to claim it in there, thus it will be paid for in the 13. 2) If you go 13 and try to reaffirm the current loan with the car company, that would be your only 'redemption' in trying for a new car - however, the trustee will keep tabs on expenses (they can pull your credit report). If you dont have the money now, and are filing a 13, you may wind up with a dismissed case or you may even be required to pay more into the plan (ie. an adjustment to your plan may occur because you did not report extra income in the filing in order to be able to pay for the monthly 13 pymt AND also able to have a new car pymnt -as they dont look highly on that). If you default on the new car after the filing, you cannot add it later on; as it was a new debt, a rather large debt, after the original filing.
Just things to think about.
I'd settle on keeping the vehicle you have, talk to your lawyer and trustee about how to, if possible to get the vehicle paid down/paid off and get it removed from the 13. I am going through this right now. I would give you an answer, but my lawyer is out of town to ask. (I have a vehicle, w/only 8 months left on the loan, but had to put it into the 13. So, yes, I want clear is asap! And its a 2002 w/95000 miles...so its probably not going to last the duration of the plan). I know there is a way to get it out of the 13 - once its paid in full - to have it removed from the 13 so you can get the clear title in your name free and clear before your discharge occurs...I just dont know how that all works on that end of it though.
ps - suggest not to let it go as a voluntary repo, as that is the same as any repo on your credit report...and you will still have to pay the difference of what they sell it at auction for (so another debt yet to come in the future, not able to add into the 13 after the fact). Better off keeping it for now.

[pcn]

By buying it now, you are allowed to factor that payment into the "plan" amount. If your used car dies during the plan you will have to 1) Get court approval to incur new debt, 2) Find the money to make the payment from any cushion you may be able to build into the pan. If there is any way you can, it is best to get a newer (not necessarily brand new, but interest may be better for new) reliable vehicle before you get locked into a 3 or 5 year plan.

[crookedoak]

Buy now!!!!

[PatinCA]

Our atty just explained how getting a new car would effectively reduce the amount we pay to the Trustee...so that getting a new car would really be kind of free, in that we would be paying that same monthly amount whether it's all to the trustee or part to trustee and part to car loan company. Even after reading about advice to get the car before from everyone here for the last 9 months. I just didn't get it until he explained it. I just wish he had explained it to us at our first interview 5 months ago. Back then we still had pretty good credit as the late CC's were not even being reported to credit agencies yet. We didn't hire him until last month though. We were ready to file today until he said, "I can't advise you to do this..but." and then he tells me about how it worked. So we are holding off until we get the car. We picked out a car on Saturday, went back today and spent 2 hrs doing prelim negotiating, and then they say they can't get a loan approval without talking to a human (instead of computer). So they will call us tomorrow. My dh asked me if that was a "don't call us, we'll call you" lol. Our score was 568, so hoping good income, including a military retirement check will go in our favor. I took an ativan before the whole thing, so I laughed it all off. I HATE car buying, and have always had excellent credit in the past, so this was kind of embarrassing. Trying to get used to that is hard.

So I say, If a person can get the car before stopping paying the cards, it would make it a lot easier. You will be able to afford a nicer car if you are paying low interest.

This doesn't really help the OP, but was throwing in my experience so far on this subject.

[woeisme]

By buying it now, you are allowed to factor that payment into the "plan" amount. If your used car dies during the plan you will have to 1) Get court approval to incur new debt, 2) Find the money to make the payment from any cushion you may be able to build into the pan. If there is any way you can, it is best to get a newer (not necessarily brand new, but interest may be better for new) reliable vehicle before you get locked into a 3 or 5 year plan.

Don't have to necessarily find the "cushion" within your plan. We were ablt to get the court to approve us to incur new debt AND to change our plan payments so we could afford to buy a car (allowed $300/month for car payment). It was very hard to get financing tho, I would recommend everyone get a newer car before filing because if you think it's hard with a low FICO scores, just see how extra hard it is while in an active 13! We did it, but at 18% interest and $2500 down, not pretty.

[crookedoak]

get a new car if at all possible before filing. even if the interest rate is higher, you can not afford to have your cars go down during your plan. Both of my vehicles died 3 years in, and In had to resort to driving 1000.00 clunkers that also broken down. Obtaining financing during 13 is very hard. I finally resorted to a long term rental agreement with a rental company, and then evenetually a rent to own purchase.