Bought a new car with 66 months repayment

[ckymky]

Hello,

We are about to file a chapter 13 in a few weeks. Here's some question that are really stressing us out. The gals in the office of the lawyer never seem to have the right answer and will only relent when I tell them to ask the attorney.

We were able to buy a new car and trade in the old one with negative equity. However, we ended up with a 66 month loan @ 7.9% which isn't horrible- $594 per month. According to KBB the new car is only about $2-$3K upside down. The first payment isn't due until the end of September. What will happen if we file before we even make the first payment? Will we be able to keep the car? Our second car has about $4K of equity and is $381 per month.

My next question is I'm pretty sure we'll be in a 100% payback due to high DMI. Will they make us pay the entire DMI and payoff in less than 60 months or will we have a lower payment amount for 60 mos.

Lastly, I'm a bit concerned about 4 rental properties we have. I'm afraid that if we don't file soon enough they will sell the homes at auction and the 2nd mortgages (these aren't primary homes) will become unsecured debt that we will have to pay off in the 60 month plan. Can that happen?

Thanks for all the help

[rrockinggramma]

you will have to figure out with your attorney whether or not you include the car inside the plan or outside the plan. If you should include it inside the plan, you can't cram it down of course, but the lender can only file a claim on the principal balance and the trustee will set the interest rate. Not sure what interest the trustee will charge. It varies from trustee to trustee (mine charged 6 percent) but depending on that, you might save some money (although your payment plan is 66 months and your plan can only run 60 so you would end up paying it off sooner than 66 months)

You would be filing to stop the foreclosures? You would be putting all of the arrearages into your plan for your 4 rental properties? If you are walking away, then you are right it becomes unsecured debt (the difference) and if they filed claims and you are 100 percent payback, then you would have to pay them back.

However, my experience has been that not ALL creditors will file claims and in 100 percent payback, you would pay those who file a claim and discharge those who do not. Cross your fingers that the lenders of your rental property do not file claims.

And probably that finance company won't let you buy another car from them for a long long time. But you do what you have to do. You made a business decision that was in the best interest of you and your family. Dont stress about it. You have a car now that can make it through the next 5 years of trustee payments. They can only repo a car that is late on the payments. And whether or not you pay all the DMI you have or you pay a little less and spread out your plan to 60 full months is up to you and your attorney. You and your attorney will set up the plan the way you want it to be. So request that you pay XXXXX a month for 60 months and have a little more left over each month. The trustee will care only if you aren't paying off 100 percent of your listed debt on the petition in those 60 months. And remember if creditors don't file claims, your time frame will be shortened because you can't pay off creditors more than 100 percent of what is owed and those that don't file a claim won't get paid a penny.

[ckymky]

That was all very helpful...thank you.

It's very hard not to stress over this every day. I'm not sure if we should hurry up to file since we are about 60 days late on the rental properties and I'm afraid if they auction them before we file we stand a greater chance of getting hit with the unsecured. I would almost like to wait to file since the rental incomes from the last 6 months are counting against me.

That doesn't seem right that they can count the rental income against you when calculating your DMI when you aren't going to be getting it any more. They also won't give me credit for the mortgage payments since I haven't paid in 60 days. Seems like I can't win. Maybe I just don't understand the process.

[rrockinggramma]

they won't be able to complete a foreclosure proceeding after only 60 days. Most can take up to a year to complete. They can get it started but usually not until 90 days has passed. Hold off as long as you can to not have that rental income included. And with 4 deficiency balances in your plan, I highly doubt you would end up 100 percent payback, unless of course you make a LOT of money otherwise.