Question about my vehicle

[jmor43]

Hello,

I am thinking about filing for chapter 7. My question is regarding my vehicle...I have a truck that will be paid off in 3 months. If I file now and the bankruptcy is not finished before the truck is paid off, how will that affect me being able to keep the vehicle? I will definitely re-affirm this loan.

Do I still need to owe money on the truck after the bankruptcy is over with in order for me to keep it?

Thanks for the help.

[lrprn]

Welcome to BK Forum, jmor - glad you found us!

I have a truck that will be paid off in 3 months. If I file now and the bankruptcy is not finished before the truck is paid off, how will that affect me being able to keep the vehicle?

A truck that is that close to being paid off is very likely worth a lot more than the value of the loan. You'll have to protect the value of your truck with your state's exemptions in order to keep it. Which state are you in?

I will definitely re-affirm this loan.

Ask an experienced bankruptcy lawyer during your free consultation visits to 2-3 in your area about this. If your state is one that doesn't allow a lender to repossess if your payments are current (several are), then it won't be necessary to reaffirm as long as you make the last 3 payments on time.

Do I still need to owe money on the truck after the bankruptcy is over with in order for me to keep it?

Owing money or not owing money doesn't matter - it's whether you can protect the truck's value with your state's exemptions when you file that decides if you can keep the truck for sure.

Sounds like you're just starting on this journey, jmor. Do take time to read the stickies here in the Forum to learn more about how Ch 7 bankruptcy works. Also ask lots of questions when you go see 2-3 bankruptcy lawyers in your area - most give free or low cost initial consultations. You'll learn a lot about your situation and what's going to be possible to do if you file.

If you can answer a few questions for us, we can help you sort out if you can file Ch 7 and what may happen to your truck.

If you look back for the last six full calendar months, how much gross income did you make from all sources? Are you married? Kids? Does your spouse work? How much did he/she make over the last six months? Other adults living in your house or apartment? Do you have other assets you want to protect - a house, for example? And which state are you in?

Hang in there - we'll help you sort things out as best we can.

[JollyGG]

We only owed 5 more months on our car when we filed. We did reafirm and even got a better rate and lower payments by doing so (only about $5 a month, but every little bit helps). We payed off the vehicle a month after our discharge and never had any problems with the bankruptcy.

We had enough exemptions to cover it and so we kept it. We were current on our payments and never missed a payment so we got to keep it.

The only problem we had was that our loan was going from the bankruptcy department back to the regular auto finance department (due to the reafirmation) when we paid it off. So we had a little trouble getting ahold of someone who could do the lein release. But it got done and we own the car free and clear.

We didn't specify in our reafirmation agreement that they had to report our payments to the credit bureus so unfortunately our loan does say IIB on our credit reports. I'm working on that, but have been told not to hold out a whole lot of hope.

[JRScott]

How old is the vehicle?

That really would be the deciding course.

What is its NADA value?

Once you can clear that up we can better advise you.

[jmor43]

Ok here is my situation. I live in CO, I am single, no kids. I share an apartment with my brother. Don't have much in assets, other than this truck that is nearly paid off. No houses, real estate, nothing like that. The only asset I care to keep is the truck if possible.

My gross income over the last 6 months is $15,351

[jmor43]

Oh yeah, I have about $21K in CC debt. Looks like the value of the truck is $17,950 NADA. I have 3 payments remaining. The truck is a 2003 F150.

[lrprn]

Oh yeah, I have about $21K in CC debt. Looks like the value of the truck is $17,950 NADA. I have 3 payments remaining. The truck is a 2003 F150.

In Colorado, you can only choose the CO exemptions. Unfortunately the vehicle exemption is only $3000 and there's no wildcard to add more to that amount - http://www.bankruptcyinformation.com/CO_exemp.htm

You are going to have a problem because your truck is worth a lot more than you owe on it and you can't protect the extra with your CO exemptions. That's going to make it very attractive to your trustee to take and sell or force you to pay him/her whatever the extra value above $3000 is to keep the truck.

Make appointments with 3-4 bankruptcy lawyers in your area to discuss your situation and see if there's anything that can be done to protect your truck. It's not looking good at the moment

Although it's very hard to consider, have you considered selling your truck, getting a reasonable used car for $2-3,000, then paying off more than half of the debt with what's left? That might get your finances back under control without having to file bankruptcy. It's worth thinking about, as much as you may not want to do it.

[Lindsay]

Lrprn is right. If I were in your situation, I would sell the truck and use a couple thousand to buy an inexpensive car or truck. $21,000 in debt really isn't that huge unless you have some health issues that prevent you from making more money. If you are already late on your credit cards, they may well take a settlement of less than you owe and you can avoid bankruptcy altogether. I don't think there will be anyway to save the truck if you file bankruptcy as they will want to sell it and use the profits to pay the creditors. You may as well just do that yourself and settle with the creditors. You can always get another nice vehicle when things are better financially.