Trading or disposing of an upsidedown car in the middle of a 13

[Danglin]

No...Not literally upside down! But due to the obscene amount of miles that my wife commutes, we have a car with about 170,000 miles that has a transmission that is starting to slip.

We bought the car about a year before we filed our 13, and now we're exactly 18 months into our 5-year plan. The car payment is built-in to the plan and paid through the trustee. The thing is, the balance on the car is about $12,000, but with the high miles and trans problem, it's probably only worth about $6000.

If we tried to replace the car, how would this work? Do we just give up the car and and fold the deficiency amount into the plan, and then get permission to incur debt for the replacement car? Or is it the same as if we were not in BK, in which the amount of the deficiency gets built-in to the newer car's loan?

On a side note, how much could we expect to be allowed for a purchase price of the replacement car? The trustee re-amortized our original payment over the 5 year chapter 13 plan, and the payment he is making on this car is $300 a month, plus about $20 interest. We pay about $3900 into our plan each month, with all but $10,000 of it unsecured.

I know we'll need to talk to our attorney when the time comes, but I wanted to have an idea beforehand, as the attorney is very difficult to get a hold of.

[159515951]

I'd get the transmission diagnosed and get it repaired. You're considering eating (or rolling, which is even worse) $6,000 in negative equity to avoid what could be a $1,000 repair.

We have a car with about that many miles that is used as a long-distance commuter, and expect it to go at least a few more years. Based on what you said, you're driving around 5,666 miles/month. There's no sense in trading every 30 months and taking a bath on the negative equity, regardless of whether or not you're in a Chapter 13.

Just my $.02.

[Danglin]

I'd get the transmission diagnosed and get it repaired. You're considering eating (or rolling, which is even worse) $6,000 in negative equity to avoid what could be a $1,000 repair.

We have a car with about that many miles that is used as a long-distance commuter, and expect it to go at least a few more years. Based on what you said, you're driving around 5,666 miles/month. There's no sense in trading every 30 months and taking a bath on the negative equity, regardless of whether or not you're in a Chapter 13.

Just my $.02.

I'm a car guy, and the cost to repair this trans is about $2800 for the parts alone, and it's already on transmission #3. It's a defect inherent in the design, and that's the cost to do it right.

My question relates to whether or not we just give up the car in the chapter 13 and get permission to buy another, or do we have to go the trade route and eat the negative equity.

[Mayo]

Getting a Car loan in an active 13 isn't easy. If you aren't in a 100% payback the trustee will want to know where you are getting the extra money for a car payment. You would have to also have to find a way to settle up with the finance company. That car loan will be for the whole 5 year duration not just the original loan timeline. I'd personally spend the money to fix the car right and stay off the Trustee's radar.

[andy158]

We went into our bk with a 2004 Chevy with 89k on it. Three years later is has 187k on it. My wife travels alot for her job and does not get the pleasure of a company car. The trans went out last year and we had no choice but to repair it because it is being crammed down in our plan.

Cars are a lose/lose proposition. Even though you buy a new or relatively new one, money has to be spent on a depreciating item. Sounds like yours has been crammed down too making it difficult to replace it in lieu of a catastrophic loss. Get it repaired and move forward.

[159515951]

I'm a car guy, and the cost to repair this trans is about $2800 for the parts alone, and it's already on transmission #3. It's a defect inherent in the design, and that's the cost to do it right.

My question relates to whether or not we just give up the car in the chapter 13 and get permission to buy another, or do we have to go the trade route and eat the negative equity.

I'm just curious -- which car did you buy that eats a transmission every 60k miles, particularly with most of your miles being highway? I'd have to conclude that the shop that did the work on #2 and #3 probably shouldn't be the one that puts #4 in!!

I'm a car guy as well, but $2,800 for parts alone is high unless you're allowing the dealer to do the work ($$$) and you're buying a new rather than rebuilt unit ($$$). It may be worth it to find a good shop that can rebuild the transmission, find the weak link, and upgrade the problem part. You might want to install an aftermarket transmission cooler as well to make it bulletproof.

Good luck with whatever you decide.

[TrainWreak]

You might want to do some research on a product line called LubeGard. They have a full line of products to make tranys last longer and work better. It might be too late for this one but you might want to add it to the next one.
I will use it in every car I have from now on.
I used one of their products to fix a design "shudder" instantly until I could upgrade the fluid to the newer stuff. Also they have an overall protectant that cools the trany too.

[Danglin]

I'm just curious -- which car did you buy that eats a transmission every 60k miles, particularly with most of your miles being highway? I'd have to conclude that the shop that did the work on #2 and #3 probably shouldn't be the one that puts #4 in!!

I'm a car guy as well, but $2,800 for parts alone is high unless you're allowing the dealer to do the work ($$$) and you're buying a new rather than rebuilt unit ($$$). It may be worth it to find a good shop that can rebuild the transmission, find the weak link, and upgrade the problem part. You might want to install an aftermarket transmission cooler as well to make it bulletproof.

Good luck with whatever you decide.

See below for the full explanation, but I put a mobile home-sized trans cooler on the car when we bought it. We change the fluid every 20,000 miles, and it is never burned or smelly. These problems are not heat related, but have to do with the converter relief valve and the internal trans seals.

You might want to do some research on a product line called LubeGard. They have a full line of products to make tranys last longer and work better. It might be too late for this one but you might want to add it to the next one.
I will use it in every car I have from now on.
I used one of their products to fix a design "shudder" instantly until I could upgrade the fluid to the newer stuff. Also they have an overall protectant that cools the trany too.

We have a 2006 Impala SS with the LS4 V8 and 4T65-HD trans. Unbeknownst to us when we bought in 2009, these cars have endemic transmission problems due compromises made by GM in trying to get a 303 HP engine to live with the existing trans. I'm a member of a website that specializes in these cars, and I track people who've had the same problems. So far, we've tracked nearly 230 different owners who've seen either a failure or serious problems. We estimate (and it's a rough estimate) that the failure rate by 100,000 miles is close to 70%.

In our situation, the trans failed at 57,000 miles, which was rebuilt under warranty. It failed again at 87,000 while still under warranty and was replaced with a factory remanufactured unit (GM doesn't build this trans anymore, so there are no brand new ones). After the second failure, I did some research and learned the technical reasons why these transmissions fail. This led me to a shop in Indiana that specializes in these transmissions. Since mine was "new", we did some minor upgrades, in the hopes that these problems wouldn't happen again. Well, it's lasted 83,000 miles since the last time, which is longer than most people get on a remanufactured unit. That same shop sells a complete trans with dozens of proprietary upgrades with a 12 month warranty for about $2800. I know several people who have picked up this unit, and there have been zero failures with hundreds of thousands of miles logged.

If we were to get it replaced, this is the way we would go, but that's A LOT of scratch for being a in a chapter 13. At this point, it seems like we should cut our losses and move on, although my wife loves the car, and its had ZERO problems outside of the trans.

[159515951]

If we were to get it replaced, this is the way we would go, but that's A LOT of scratch for being a in a chapter 13. At this point, it seems like we should cut our losses and move on, although my wife loves the car, and its had ZERO problems outside of the trans.

Thanks for taking the time to provide that explanation. That is a great (and fairly new) car. If you buy new, you're starting all over with another car that will likely have its own set of problems in a year or two. That, and your wife loves the car and it's been flawless otherwise!

Agreed that the transmission is expensive, but I think you've answered your own question -- go with the new/upgraded transmission and drive the car for the next 5 years. Or, spend twice as much in negative equity rollover on a car your wife probably won't enjoy nearly as much. Seems like a no brainer.

Good luck!