Repossession-Need better car

[szbenne]

Ok...here goes...my car was repossessed in July 2008 and I have been working on the paperwork to file my own Chapter 7, before they come looking for the balance owed on that car. A friend blessed me with a car, 89 Buick, but it is not in the best of shape. I would like to use my tax refund of about $500 as a down payment on a better car costing about $5000. I plan to file within the next month or so but I am not sure if I should try to get this car before or after I file. Either way, I know my interest rate will be crazy.

I have read everything that I can on here and it looks like people have done both, so it has left me confused. If I understand the Federal exemptions correctly, I am only allowed a car valued at about $2700 but as a single mother I need good transportation for work. So here are my questions.

1. If I can get financing for a better car valued at more than $2700, will I be allowed to keep it? If it is my only car and in spite of the exemption.

2. Any ideas on what will hurt my interest rate more, the repo or the repo and BK?

3. Should I try to buy it now or after I file?

Thanks in advance for any ideas, info and input!

[keepmine]

The $2700 figure you reference is the equity in the car-not the value.
If you use $500 for a downpayment on a $5K car, you are well below the equity requirement.
I'd suggest getting your transportation needs taken care of prior to filing.

[szbenne]

Thank you that sounds good! But then would I have to reaffirm during the BK? Or am I able to keep car and make payments as usual?

[IBroke]

You also have the option to redeem the car within 45 days of the "341 meeting." This means that you have to pay the entire balance due within that time. Because most debtors do not have that kind of money, this option is rarely used.

As far as I know, you have to pay the Fair Market Value to redeem, NOT the entire balance due. That can be quite a difference..

[TEW]

You may very well lose the car if you buy a car then file. As I posted in another thread you have to show you can pay for the "new" car.

From another site:

Under the new BK law, you have to reaffirm your car loan within 45 days after the "341 meeting." You no longer have the option of continuing your car payments without reaffirming the loan. Once the loan is reaffirmed, if you default on your payments and the car is repossessed, you are liable for the repossession deficiency.

You also have the option to redeem the car within 45 days of the "341 meeting." This means that you have to pay the entire balance due within that time. Because most debtors do not have that kind of money, this option is rarely used.

If you decide to reaffirm a debt, you are required under the Bankruptcy Code to file an agreement with the court. The agreement must disclose that you were advised of the amount of the debt you are reaffirming and how it was calculated and that you are aware that the debt will not be discharged. You must indicate your income and expenses so that the court can see that there is sufficient money to pay the reaffirmed debt. Unless you are represented by an attorney, the court must approve the agreement. A hearing will be held if the court disapproves. If an attorney represents you, he or she must certify in writing that they advised you of the legal consequences of the agreement, that you were fully informed and entered into the agreement voluntarily, and that the reaffirmation will not create an undue hardship on you and your family.

So most people that buy a newer car now are going into a CH13 not a 7. You should wait until your out of your CH7 and you can then get a better rate since you will be debt free and you can do as you please. JMHO.

Also lets clarify one point here. Equity is the amount you DO NOT OWE it is what the vehicle is worth minus the amount owed. If you go out and put $500 down on a car you just bought for $5000 you are probably still in a minus equity position. Now if you put down $2500 on a $5000 car maybe at the point you may have some equity. Equity is determined as the value of the vehicle if you had to sell it right now this minute at auction. So the true value of the car your buying at that dealer would probably be what the dealer paid for it around $3000 or so and no one is going to go after $300-$500 in equity in a car.

most people are riding the car through the BK with out a reaff yeah that's what the law says but that's not whats happening. OP will most likely be able to do a ride through and keep the car.

[debtmonster]

Under the new BK law, you have to reaffirm your car loan within 45 days after the "341 meeting." You no longer have the option of continuing your car payments without reaffirming the loan. Once the loan is reaffirmed, if you default on your payments and the car is repossessed, you are liable for the repossession deficiency.

Since I have 2 repo's on my credit report, those redemption loan companies said I don't qualify for a loan after the bankruptcy.

And with me owing $12,000+ on my car and it being worth $5,000+, there's NO WAY I am going to re-affirm all of that negative equity.

I was hoping to just ride it through. I had no idea that I'd have to buy a new car. So now I will have to truly buy a BEATER CAR. Man, this is going to ROYALLY SUCK BIG TIME. I was hoping to just keep the car I have and not re-affirm.

Every time we go to the grocery store, a restaurant or anything, it's a 50-60 mile drive round trip each and every time!!

I will be lucky to have $1500-2000 in 45 days time from the day I file. NOT COOL AT ALL and not a single friend or family member will loan me a DIME!!

[TEW]

Since I have 2 repo's on my credit report, those redemption loan companies said I don't qualify for a loan after the bankruptcy.

And with me owing $12,000+ on my car and it being worth $5,000+, there's NO WAY I am going to re-affirm all of that negative equity.

I was hoping to just ride it through. I had no idea that I'd have to buy a new car. So now I will have to truly buy a BEATER CAR. Man, this is going to ROYALLY SUCK BIG TIME. I was hoping to just keep the car I have and not re-affirm.

Every time we go to the grocery store, a restaurant or anything, it's a 50-60 mile drive round trip each and every time!!

I will be lucky to have $1500-2000 in 45 days time from the day I file. NOT COOL AT ALL and not a single friend or family member will loan me a DIME!!

So don't reaff the loan

[debtmonster]

So don't reaff the loan

I'm not planning on it. But I don't want to give the car back in 45 days neither. I want to save $8,000 cash as fast as possible and then buy a replacement and give the one I have back. Can I do that or will it null out the bankruptcy for going way past the 45 days and not signing any paperwork on the deal?

[szbenne]

What now?

Ok...so I bought and financed a 2001 Isuzu for $5400 at the end of February. I paid $1000 down and my first payment is due in April. I just file my bankruptcy pro se last Friday. On my forms I put that I intended to reaffirm this loan with the hopes of keeping the car by making my payments on time.

My question is whether I should call the finance company and tell them? I am afraid that when they get my BK info they may decide to cancel the loan and repossess the car.

I'm very nervous...what do you guys think?

[debtmonster]

Ok...so I bought and financed a 2001 Isuzu for $5400 at the end of February. I paid $1000 down and my first payment is due in April. I just file my bankruptcy pro se last Friday. On my forms I put that I intended to reaffirm this loan with the hopes of keeping the car by making my payments on time.

My question is whether I should call the finance company and tell them? I am afraid that when they get my BK info they may decide to cancel the loan and repossess the car.

I'm very nervous...what do you guys think?

You asked what we think... my question is, why would you buy such an old car for $5400 when there are so many newer cars with low miles for the same price?

Isuzu is pretty much going out of business in the US.

There are many alternatives that are newer, lower miles and often cheaper. If you were looking for cheap A to B vehicles, here's some examples that are newer than 2001 with under 60,000 miles.

Look at these deals you could have gotten!!
Deal #1 - $3,000
Deal #2 - $3988
Deal #3 - $4300
Deal #4 - $4400

The deals are out there. You just have to look.

I have learned my lesson and I am trying to help others to not fall in love with their cars. Just get something that goes from A to B and is cheap, fairly new and has low miles.

[ShouldWeFile]

To answer your q to the best of my ability szbenne, the automatic stay prevents the lender from taking any action against you. There is no need to be nervous. The main thing you must do is make sure the payments are made in a timely fashion (on the reaffirmed loan), otherwise they can ask the court to remove the stay so they can reposses...

[szbenne]

Thank you for answering my question.

Do you think that I should call them to tell them my intentions are good?

[debtmonster]

It's always good to have good communication with the bank, especially if you plan on keeping the car.

As I said in the previous message, what made you decide to buy such an old car when there's so many newer ones for a lesser price?

[OhioFiler]

It's always good to have good communication with the bank, especially if you plan on keeping the car.

As I said in the previous message, what made you decide to buy such an old car when there's so many newer ones for a lesser price?

I don't see this line of questioning as relevant.

[debtmonster]

I don't see this line of questioning as relevant.

I am just curious to know why people opt for older, less reliable vehicles when they know better stuff is out there. I had a friend go do this after I told them not to. The engine in a car they bought started knocking really loud and now it will cost $4,000 to have the engine replaced. Then people have thousands in repairs not too far down the road, then I have to sit there and say, "I told you so."

It's like people are being masochists. I just wanna know why people like to self-inflict pain on themselves. It makes no logical sense.

Why would you want something older, have more miles, more problems and more headaches when you don't have the money to begin with? That's just opening a can of worms. All I want to know is WHY?!?!?!

AutoTrader.com makes it so easy to find newer cars with low miles from a dealer or private person. It took me only a few minutes to locate those low mile, late model, low-priced cars. I am not understanding why other people are not doing the same thing. Why is this so difficult? PLEASE EXPLAIN!!