Giving Car Back During Chapter 13

[boye72]

I am a little over 3 years into a 5 year chapter 13. I have a van I have kept because it was needed for my job. I am going to be changing jobs and will no longer need the van. If I give it back, the attorney said it will leave about 6 months left on my bankruptcy instead of almost 2 years. This will help get this over quicker and help get my credit back. My question is whether or not this will bring down my credit score further or if this will just be considered all in the chapter 13 filing. Thanks for your help.

[jcj112562]

Unless you are already paying back 100% to your unsecured creditors in the Plan, surrendering a vehicle will not shorten the timeframe, it will just increase the amount you pay back to unsecured creditors. Not sure if it will make any worse credit, but I am sure you will get better answers on that here shortly.

John

[boye72]

Is that the case even if I've been paying for the 3 year time period? When I asked my attorney, he said it would shorten the time I pay. Maybe he didn't understand my question. I just want to make sure before I give back the van and have to continue paying anyway.

[jcj112562]

How long you have been paying does not matter. If you will pay off 100% of all secured and unsecured claims, *THEN* it can shorten the plan, if you have not, then your plan payment stays right where it is, and the percentage of payment to all unsecured debt will go up. This sounds a lot like the pre-2005 thing where you could "buy out" of a Ch13 plan early...but that is no longer the case.

John

[rjd78]

I gave a car back in the middle of my 13 because it basically stopped working and I couldn't afford the $4000 to fix it. My attorney wrote a letter to the bank letting them know what I was doing, basically just saying that the bank wasn't going to be receiving any more payments, and to come pick it up at the specified address. I then got permission to get a new car loan from the trustee. My payments to the trustee also dropped by $200 per month to offset some of the new car loan payments. The length of my plan didn't shorten any though.

Also, I'm a Nazi when it comes to monitoring my credit. It didn't affect my credit at all. I don't believe creditors included in your 13 can do anything to your credit (positive or negative) once they're included in on the 13 payment plan.

FWIW, I used a credit repair service for the last 8 months to help get my credit score up. The name of the company is Lexington Law. They're an actual law firm that challenges negative items on your credit report. It cost $40 per month, but in my opinion it was worth every penny. After I filed for CH13, my score(s) were in the low 500's. Using Lexington, I got two of them up to between 650-690 now. Because of that, I got pre-approved for a home loan, and the trustee just granted me approval to buy a house.

[jetsfan2010]

I gave a car back in the middle of my 13 because it basically stopped working and I couldn't afford the $4000 to fix it. My attorney wrote a letter to the bank letting them know what I was doing, basically just saying that the bank wasn't going to be receiving any more payments, and to come pick it up at the specified address. I then got permission to get a new car loan from the trustee. My payments to the trustee also dropped by $200 per month to offset some of the new car loan payments. The length of my plan didn't shorten any though.

Also, I'm a Nazi when it comes to monitoring my credit. It didn't affect my credit at all. I don't believe creditors included in your 13 can do anything to your credit (positive or negative) once they're included in on the 13 payment plan.

FWIW, I used a credit repair service for the last 8 months to help get my credit score up. The name of the company is Lexington Law. They're an actual law firm that challenges negative items on your credit report. It cost $40 per month, but in my opinion it was worth every penny. After I filed for CH13, my score(s) were in the low 500's. Using Lexington, I got two of them up to between 650-690 now. Because of that, I got pre-approved for a home loan, and the trustee just granted me approval to buy a house.

Very good info. I have seen many posts on Lexington and was skeptical that their service really worked.