Car advice- pre-filing

[adm]

Hi- first post.

We haven't filed yet but think we won't qualify to Ch7. Already consulted w/atty & they are running #'s (7 vs 13).

We had 2 cars, one is current (payment 355) and other is paid off but at 202,000 miles (my commute = 100+ miles/day). Clearly the old car will need to be replaced at some point.

Do I replace it before filing? We were current on all cc's until this month.

Mortgage= 1st only, current, keeping
car= current
student loans = 160K:/ current
unsecured cc = 50K, just starting to not be current (none are 30+ days late)

(Also we have to not pay cc's to afford atty...current cc payments = 1500/m which has lead to robbing Peter to pay Paul situation...)

Do I go to some used car lot and get a high % loan? We have a high DTI ratio (spouse unemployed...high debt, interest increases on major cc's = no $) so no "traditional" lender will provide us an auto loan...and we have no $ down but I suppose we could come up w/$500?

Does anyone have any experience with this?

[LadyInTheRed]

Have you applied for a loan through a "traditional lender"? How's your credit rating? My DTI ratio is high too, but my credit score was 735 since I hadn't yet missed payments. I qualified for Honda's promotional finance rate (without a down payment), bought a car, then stopped paying unsecured creditors. It's crazy that anyone would loan me money, but they did! I did have to swallow hard as I initialled the box saying I don't plan to file BK. If you are going to do it, do it now before the creditors start reporting the late payments (assuming you can fund the plan).

Ask the attorney if it's okay to finance a car. Even if he says it's okay, make sure you can afford the payments after a Chap 7 discharge or that the car payment won't make it impossible to fund a Chap 13 plan. Don't worry so much about the rate, as long as you can make the payment. If you file a 7, you can refi after a couple of years. In a 13, a high interest rate just means less goes to your unsecured creditors and you'll be glad to have a reliable car to get you through the plan.

[SMinGA]

In most 13's, the loan can be paid thru the plan and the contract rate gets reduced to what your district deems reasonable.

If you can get financing on a reliable, reasonable vehicle - that may be in your best interest. The 200k milage vehicle is not likely to last 3-5 years. However, your attorney may recommend making a couple of payments on the loan before filing. Since you're not yet late on anything, that would likely not pose a problem. (No imminent foreclosure or lawsuit pending.)

[adm]

When we bought our 2007 car (spouse employed) we got approved through credit union & Honda but refi'd w/credit union for lower rate that took awhile due to high DTI. SO, I'm not hopeful about "traditional" lending since I will apply for loan on my own (spouse = UI) & community property state so they just 50/50 the debts.

Stopped paying cc's on the 15th, so no reporting for another 2 weeks, hence my concern to do something. I emailed my atty last night to inquire about this.

Got approved via roadloan for 12% (not great but ...) and checked out around and we could do up to $13000 for $250/m or so. We need a late model/low mileage car for least repairs.

Here's what's crazy (and will post Q in another forum/thread): I was reading the terms and it defines default as FILING for bankruptcy! Anyone have any experience w/this? I mean if I reaffirm and am current, what's the problem?!?! I wonder if anyone has gone this route pre-filing w/this company and what happened?????

Thanks all- this website is amazing (and addicting!).

[NoTomatoCan]

Yup. Many people go this route, whether it is with RoadLoans or someone else.

Personally, we did RoadLoans. Got approved for a 12.75% loan (or some figure like that). Purchased a new to us vehicle, made 3 payments, then filed for BK.

What happened? Nothing. They were included in our BK along with our other car loan. They will get the interest rate lowered to 5% and will be paid in the plan.

[SMinGA]

Adm, I posted in your other thread also.

That statement is probably nothing to be concerned with. When one files bankruptcy, they 'file' on all their debts. And since filing bankruptcy results in the automatic stay, etc. it is technically a default on all debt. But not anything your creditors can do anything about...

12% is probably not a bad rate. I also mentioned in the other thread - you will need to find out what your district's till rate and trustee fee is so you can figure out if its best to pay the loan @ 12% outside of the plan. Or inside at the till rate. For anything paid thru the plan, the trustee takes a fee off first. So if you make a $400 payment and trustee takes 10%, only $360 goes to creditors.