Car Question

[movingon313]

2 years ago as part of financial abuse related to domestic violence, I was pressured into signing a terrible car loan, 20% APR daily interest calculation. Monthly payment is $782. Shortly after I signed for the loan I was able to get out of the relationship but then ended up on the hook for the payments that my ex was supposed to pay. I ended up needing to move across county for safety reasons and spent the first 6 months I was in town out of work, everything got behind and the smart choice became filing for BK.

I own my house in the city I relocated to free and clear, used the proceeds of the sale of a business I owned prior to moving to buy. I had a bunch of bad debts all related to getting out of the relationship that I had just started to take care of prior to being out of work, but the domino effect was a hard and fast fall into financial ruin. I filed BK at the point the car was 3 payments behind and up for repression, I figured my credit was already shot, if I was going to deal with a repo at any moment I might as well deal with the rest of the debt I was drowning in that was killing my credit and use the time in the BK to figure out what was next. Credit score has gone up since the BK filing has hit my credit report.

Now I'm wondering what I should do about this car. I just JUST got work again($3000 take home monthly, haven't received my first check yet), I'm living in a city where I must have a car to work. My monthly expenses are low, under $1000, and I'm trying to figure out my options about the car in BK. I'm under water on the loan, owe about $13,000 more than the car is currently worth and the interest rate is insane. The car will reasonably last 5+ years, $18k makes sense, $32K does not. I've already paid about $12k on it. What are my options? What makes sense?

I'm not opposed to giving this car up IF i know I can find reliable affordable transportation, had a previous car loan that I paid off early.

If I don't reaffirm the loan, when is repossession likely to happen? This is my only BK there is an automatic stay in place.

[justbroke]

There's no way to tell if or when the lender will repossess. They may wait until after close of the bankruptcy or they'll file for relief from the automatic stay (RFS). Also, did you know you could have tried a Redemption under 11 USC 722 (a/k/a the 722 Redemption process). There's at least one bank, US Bank, that does these loans in Chapter 7. I did this and saved over $11K on my underwater vehicle. The loan would also be in the high teens, but if you're $13K underwater, then you would shed the $13K.

[movingon313]

There's no way to tell if or when the lender will repossess. They may wait until after close of the bankruptcy or they'll file for relief from the automatic stay (RFS). Also, did you know you could have tried a Redemption under 11 USC 722 (a/k/a the 722 Redemption process). There's at least one bank, US Bank, that does these loans in Chapter 7. I did this and saved over $11K on my underwater vehicle. The loan would also be in the high teens, but if you're $13K underwater, then you would shed the $13K.

I have my 341 hearing the first week of Sept, I'll look into the 722 thanks! Need to make sure that financially it makes sense, I want to keep the car, but it may be smarter to let it go and get something less expensive....of course "cheap" cars tend to end up costing the most. I'll explore my options. I don't know that I'd be able to get a loan at this point, my credit score is either 481 or 566.

[LadyInTheRed]

You most likely will be able to get a car loan after discharge. It very well may be lower than a 20% rate. You become a better risk after BK, because your debt will be gone and you will not be able to file another BK for 7 years. Your mail will be full of car loan offers.

[bcohen]

Of course, you would be able to finance another car--quite easily--after discharge. I can recall from my personal experience of filing for Chapter 7 bankruptcy with several active charge-offs, collections, and even a judgment on my credit reports, and within days of filing, offers to buy and finance a car started pouring in. Some of these offers were from sleazy "buy here, pay here" used car lots, but a lot of them were from legitimate new-car dealers.

With such a high monthly payment, it makes sense to try the redemption route, if possible. Otherwise, you should quit paying, drive the car payment-free for a couple months, and then buy something else when it gets repossessed.