Keeping truck but not reaffirming..

[Dee93til]

I seen an attorney today and advised my husband and I to keep the truck without reaffirming the loan and to just keep paying until we can get another truck after bankruptcy is discharged.
reason being: I have 2 other loans with the credit union along with the auto loan which is cross collaterized. It wouldn’t be worth keeping the truck because of how much we’ll end up paying overall to get the title once the truck is paid off..
does anyone have experience with this? I know the only major risk with doing this is the CU possibly comes and picks up the truck anyways. It is our only source of transportation and my husband needs it for his field of work.. so it is risky however, I don’t want to be stuck paying double what the truck is worth..
Do credit unions pick up the vehicle if you’re still making payments on time?

[justbroke]

If you don't reaffirm a vehicle that has a lien from a credit union, they are coming to take that vehicle. Expect a credit union to be about the most aggressive creditor that you will meet (other than American Express, Discover and the notorious Bass & Associates representing Best Buy).

I don't know why you'd be sending in money for the truck since that would be wasted money. I guess the theory is that it will keep them at bay for awhile, but I would not count on that strategy. My guess is -- and I don't like guessing -- is that the CU will close that loan and you won't be able any payments on the vehicle. The loan should be closed once you file and the CU is notified of the bankruptcy.

Do credit unions pick up the vehicle if you’re still making payments on time?

See the above. Credit unions do not like loss. If it's cross-collateralized and you reaffirmed that would be one thing. I would opine that marking surrender on the Statement of Intentions of any one of the cross-collateralized debt will likely draw some questions from the CU. I would expect the CU's representative to be at the 341 Meeting asking specifically about the vehicle (that's what it was like in the Florida 341's that I attended).

If the truck is that important, have you considered a 722 Redemption loan instead and redeeming the vehicle? Has your attorney even mentioned redemption? With redemption you can redeem the vehicle for its current market value (CMV) and pay that with another loan. So long as you can get a loan, from somewhere, you can motion to redeem the vehicle. Your attorney may charge a little more for redemption since it generally goes to a hearing and requires some leg work. You may end up with a higher APR, but you can refinance within 6 months at a much lower rate, and only pay the current value (not what you necessarily owe). Redemption saved me $11,000 on one vehicle.

Personally, I would not test a CU by marking surrender on the Statement of Intentions and expect them to not take the vehicle because you're making payments. They want all the cross-collateralized debt so unless you can negotiate and get them to remove the cross-collateralization, or concede to some other concession, please don't test them.

Of course, this is just my opinion. I know that CUs are the toughest because they are member-owned and the membership doesn't like loss.

Please let me add that if this vehicle is important to a business and your personal livelihood, then you really need to take steps that guarantee that the CU won't take punitive actions to recover their losses. I would look at Redemption really quickly. This is not an endorsement, but see if you qualify at 722 Redemption's website. They are owned by US Bank. Your scores dropped post filing so it may be an issue. I think that I applied before filing and was approved.

[Dee93til]

Thank you for the reply. I appreciate your input.
I’m not too upside down on my loan. I owe 28k and it’s worth 22k.. when I do the calculations on possible rates on 722 redemption loan, it basically comes out to what I’m paying now. The truck also has 67k miles on it so it’s not super worth the hassle either..
would it feasible to trade this truck in (I was told by a dealer that they can the truck with no negative equity to me) and obtain a new truck and loan before bankruptcy to get the best APR rates etc? I’ll of course have to wait months to file...

[justbroke]

If you can purchase a new(er) vehicle now, before filing, then that is what you should do. So long as your payments are about the same and you aren't dragging along the negative equity, it would be a WIN WIN! (Also make sure they don't try to "make your payments the same" by stretching out the loan to 72, 74, or even 84 months! If this is truly a work vehicle and the business is an LLC, SCorp or other entity, then try to get it in the business name.)

In fact, if you like the truck and it works okay, you could just go and refinance it with a different creditor now. I would do that before I filed and then I wouldn't have the cross-collateralization issue any longer.

(Refinancing also does some other interesting things when it comes to Chapter 13s. Since this is not a Chapter 13 discussion, I will not talk about purchase money versus a refinance.)

[Dee93til]

Approx. how long would I need to wait to file BK after purchasing a new(er) vehicle? And thank you for that tip about the loan stretching.
no unfortunately it’s not a true work vehicle like that.

yea we really love our truck and I’ve possibly thought about just refinancing it however, by time the loan is paid off, the truck will have about 170K miles (60 month term).. I guess I just need to run some numbers in every possible scenario and see what best works out given the pros/cons.

[justbroke]

I would only wait long enough for all the title to be updated with the new lienholder. I purchased a vehicle about 6 weeks before filing. You'll need to consider whether obtaining a loan through another credit union (CU) is worth the effort since you would need to reaffirm the debt. Should you refinance, I don't know what you could expect for an interest rate on a used vehicle, but they are usually higher than new vehicles.