My husband has a really terrible car at the moment. It's not legally registered because it won't pass inspections and the $$ to fix that is more than the car is worth. He needs a new car, no question, and he needs it yesterday. It could just die at any moment.
In 2 weeks I will have approximately $2700 to purchase him a used car (including taxes, title and insurance, so more like a $2500 car or so). His current car will go to the junkyard. We have not yet filed bk, attorney said as long as we keep paperwork and what not, it should not be a problem/mess with exemptions.
My car is a lease. It's a 2005 Saturn Vue. Payments are current and even through all the mess, always have been. However, due to circumstances that actually caused the bk in the first place, it has way more miles on it than it should. I end up commuting 30 miles each way every day. It has 59K miles give or take. The lease max is 60K, but the lease isn't up until April 2009. If we decide to keep the car, we will have to purchase it outright when it is up. We will owe so much money on fines it will not be worth it to turn it in, pay fines and then have to come up with a downpayment or cash for another car on top of the thousands in fines. At that point in time, I should have the funds to purchase it outright without completely depleting our emergency fund, but it will be close. But, I'll also have $387/month more to rebuild savings since I won't have a car payment. If we purchase it, we will have paid much more than the car is worth, and the plan is to drive it into the ground. It's got a lot of miles, but it's well maintained and most of the miles are hwy miles. It should last a minimum of 5 years after we pay it off with minimal maintainance and repairs.
We both work in opp. directions, carpooling not an option, public transportation not an option, we need 2 cars, no question about that. No car available for us to borrow from someone even for the short term.
We had initially planned on keeping the lease, even though it will cost us several thousand over market value in the long run. But now I'm thinking we might be foolish to do that.
According to our attorney, even if we buy a car in cash, we need to do it before we file or after we are discharged not in between. We are also surrendering our home, have not made a payment since Aug. The goal is to make it to the end of Feb in the house. In an effort to do that, we are holding off on filing until the last possible moment to maximize time in the home. However, we have to be cautious not to wait too long. My husband started a new job in Oct and I will get a 5.5% raise (yay!) in 2 weeks. Those two things put us *just* over the median family income for our state. However, since it is calculated based on the last 6 months of income, we have a couple months wiggle room because he made 1/2 of what he makes now before this job and when I say *just* over the limit we are talking $1-2K. We would more than likely pass the means test even if we were over the median, but I'd really prefer not to take that chance. We have received NOD and Intent to Foreclose papers, but as of yet, no soldiers and sailors notification nor official forclosure paperwork. Must be a back log. I'm pretty sure to make it well within the median income limits, we need to file early Jan. I'm confident that between the automatic stay, the time it takes to get a relief motion filed and granted etc etc we will have till the end of Feb to vacate and by then I have budgeted enough $$ for moving expenses, and first, last, double deposit, plus I kinda want to just get it over with. If we feel like we can squeak another month out of the house when Feb rolls around we will, play it by ear, but so far end of Feb is the plan.
If we decide to surrender the car, I won't make this month's payment, but how long before they will repo the car? Will we be able to keep it until we are discharged? which would be end of March or so? That's 4 months without a car payment. That's enough time for me to save about $1500 for a used car for me when we are discharged, which is fine, we can deal in the short term, but I worry that they will repo the car before we can purchase another and we simply can not get by without 2 cars, unless one of us quits a job and that's just dumb. So, to be on the safe side, I'd want to use the $$ I originally set aside for DH's car and split it for 2 cars, which would give us 2 low reliable cars in the middle of winter in New England in the middle of the bk when we have almost no cushion savings (and what does exist is necessary for deposit on rent when we move).
If I keep making payments until after discharge, but don't sign a reaffirm agreement, I will only have a couple months to save for when it is repo'ed, meaning probably only $1000K for a car for me. It looks to me like the only way I can be sure not to get screwed without a car we will both have very cheap probably somewhat unreliable cars with not a lot of savings right away (as I said, most of the savings will be going toward the rent/downpayment). And that makes me nervous.
This is such a hard decision. Based on our budget, we can afford the car payment, since DH's new job and my raise, our income has increased by about $19K/year gross. Since we will lower our expenses significantly when we move, our post bk budget is quite healthy and dare I say, comfortable. The $387/month payment is not necessarily going to be a struggle. The incentive to dump the car is that we would be totally debt free other than student loans, which our combined payment is about $300/month - more than affordable for us. Not to mention, when we have to buy it outright, we will absolutely lose money based on the value of the car. Even if we don't finance the car at all, based on the way the lease works, we will have paid $5K over purchase price in 2005. I'm fairly certain we will have the funds to do this without it causing much disruption other than draining savings a little. However, by that point, we should be putting away $1000/month in savings and if we pay off the car, $1300/month, so rebuilding it will take about 10 months or so.
It's not in question that in terms of the value of the car, we will lose $, but we'd have at least one reliable car for the next 2-3 years, and it wouldn't strain us financially to keep it (just make us pay more than it's worth). Is knowing I have a reliable car plus being positive I won't have to miss work due to surrendering the car worth the $$ loss? That is the $5K question.
Or, is there a loophole I am missing? If we continue to make ontime payments, but don't sign a re-affirm agreement, in April 2009 when the lease is up are we free and clear of the debt? That would be sweet. We'd have enough to pay at least $5K cash for a semi-reliable used car and beef up the savings. Is that sneaky and underhanded? GMAC financing has always been good to me... What will it due to credit rebuilding efforts if a year or so post bk after on time payments we suddenly lose the car?
thoughts?
In 2 weeks I will have approximately $2700 to purchase him a used car (including taxes, title and insurance, so more like a $2500 car or so). His current car will go to the junkyard. We have not yet filed bk, attorney said as long as we keep paperwork and what not, it should not be a problem/mess with exemptions.
My car is a lease. It's a 2005 Saturn Vue. Payments are current and even through all the mess, always have been. However, due to circumstances that actually caused the bk in the first place, it has way more miles on it than it should. I end up commuting 30 miles each way every day. It has 59K miles give or take. The lease max is 60K, but the lease isn't up until April 2009. If we decide to keep the car, we will have to purchase it outright when it is up. We will owe so much money on fines it will not be worth it to turn it in, pay fines and then have to come up with a downpayment or cash for another car on top of the thousands in fines. At that point in time, I should have the funds to purchase it outright without completely depleting our emergency fund, but it will be close. But, I'll also have $387/month more to rebuild savings since I won't have a car payment. If we purchase it, we will have paid much more than the car is worth, and the plan is to drive it into the ground. It's got a lot of miles, but it's well maintained and most of the miles are hwy miles. It should last a minimum of 5 years after we pay it off with minimal maintainance and repairs.
We both work in opp. directions, carpooling not an option, public transportation not an option, we need 2 cars, no question about that. No car available for us to borrow from someone even for the short term.
We had initially planned on keeping the lease, even though it will cost us several thousand over market value in the long run. But now I'm thinking we might be foolish to do that.
According to our attorney, even if we buy a car in cash, we need to do it before we file or after we are discharged not in between. We are also surrendering our home, have not made a payment since Aug. The goal is to make it to the end of Feb in the house. In an effort to do that, we are holding off on filing until the last possible moment to maximize time in the home. However, we have to be cautious not to wait too long. My husband started a new job in Oct and I will get a 5.5% raise (yay!) in 2 weeks. Those two things put us *just* over the median family income for our state. However, since it is calculated based on the last 6 months of income, we have a couple months wiggle room because he made 1/2 of what he makes now before this job and when I say *just* over the limit we are talking $1-2K. We would more than likely pass the means test even if we were over the median, but I'd really prefer not to take that chance. We have received NOD and Intent to Foreclose papers, but as of yet, no soldiers and sailors notification nor official forclosure paperwork. Must be a back log. I'm pretty sure to make it well within the median income limits, we need to file early Jan. I'm confident that between the automatic stay, the time it takes to get a relief motion filed and granted etc etc we will have till the end of Feb to vacate and by then I have budgeted enough $$ for moving expenses, and first, last, double deposit, plus I kinda want to just get it over with. If we feel like we can squeak another month out of the house when Feb rolls around we will, play it by ear, but so far end of Feb is the plan.
If we decide to surrender the car, I won't make this month's payment, but how long before they will repo the car? Will we be able to keep it until we are discharged? which would be end of March or so? That's 4 months without a car payment. That's enough time for me to save about $1500 for a used car for me when we are discharged, which is fine, we can deal in the short term, but I worry that they will repo the car before we can purchase another and we simply can not get by without 2 cars, unless one of us quits a job and that's just dumb. So, to be on the safe side, I'd want to use the $$ I originally set aside for DH's car and split it for 2 cars, which would give us 2 low reliable cars in the middle of winter in New England in the middle of the bk when we have almost no cushion savings (and what does exist is necessary for deposit on rent when we move).
If I keep making payments until after discharge, but don't sign a reaffirm agreement, I will only have a couple months to save for when it is repo'ed, meaning probably only $1000K for a car for me. It looks to me like the only way I can be sure not to get screwed without a car we will both have very cheap probably somewhat unreliable cars with not a lot of savings right away (as I said, most of the savings will be going toward the rent/downpayment). And that makes me nervous.
This is such a hard decision. Based on our budget, we can afford the car payment, since DH's new job and my raise, our income has increased by about $19K/year gross. Since we will lower our expenses significantly when we move, our post bk budget is quite healthy and dare I say, comfortable. The $387/month payment is not necessarily going to be a struggle. The incentive to dump the car is that we would be totally debt free other than student loans, which our combined payment is about $300/month - more than affordable for us. Not to mention, when we have to buy it outright, we will absolutely lose money based on the value of the car. Even if we don't finance the car at all, based on the way the lease works, we will have paid $5K over purchase price in 2005. I'm fairly certain we will have the funds to do this without it causing much disruption other than draining savings a little. However, by that point, we should be putting away $1000/month in savings and if we pay off the car, $1300/month, so rebuilding it will take about 10 months or so.
It's not in question that in terms of the value of the car, we will lose $, but we'd have at least one reliable car for the next 2-3 years, and it wouldn't strain us financially to keep it (just make us pay more than it's worth). Is knowing I have a reliable car plus being positive I won't have to miss work due to surrendering the car worth the $$ loss? That is the $5K question.
Or, is there a loophole I am missing? If we continue to make ontime payments, but don't sign a re-affirm agreement, in April 2009 when the lease is up are we free and clear of the debt? That would be sweet. We'd have enough to pay at least $5K cash for a semi-reliable used car and beef up the savings. Is that sneaky and underhanded? GMAC financing has always been good to me... What will it due to credit rebuilding efforts if a year or so post bk after on time payments we suddenly lose the car?
thoughts?
That really is a hard one!!!
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