Modifying car loans??

[reeltrouble]

Has anyone ever had success in modifying car loans? We are filing tomorrow (Ch 7), but thought we would attempt to modify our car loans through the lender before surrendering. We are going to include them in the BK, but once we have a case#, thought maybe (just maybe!), they would agree to accept less than the full balance if we agreed to re-affirm.

example: car#1 - fair market value = $10,000. Balance owed is $20,000. We agree to pay current monthly payment, until $10,000 is paid off, if they reduce balance. My thoughts are that its a win/win, the auction price will be well under $10,000, so they make out there, and we get to keep our car, for what it is truly worth.

Ever been done? How did you do it, and any suggestions?

[justbroke]

If it's Ford Motor Credit (FMC)... don't even think about it. They are the worse in Chapter 7s. (And is probably why they didn't need any stimulus money, because they are brutal in maintaining their credit portfolio.) As a matter of fact, if you file a Chapter 7 and your Statement of Intentions shows that you're surrendering that car... FMC will be all over you and will file a Motion for Relief from Automatic Stay faster than you can get a discharge.

I don't know of any motor vehicle loan creditors who would do such. Unless you're doing a settlement and giving them $10K right now, they have more risk if you re-default later. That's why FMC is so brutal in Bankruptcies... they'd rather take their loss now, than later (time-value of money and collateral which is depreciating as well).

I'm not saying don't pursue or offer this to your lender, but don't be surprised by their unwillingness to negotiate. Most would rather repossess your vehicle, sell the car, and then sell the deficiency to a Junk Debt Buyer (JDB), as a loss.

[NoMoreRed]

You may be able to, but most likely the only way to cram down the amount owed is through 722 Redemption.

[Doghouse]

I am also filing for bk in about 2 weeks. I owe appx 13K on my car 2006 Honda Pilot. The KBB value says it's worth anything from 16K on a trade-in to 20K for private party sale to 23K for suggested dealer sale. I'm thinking of also trying to negotiate a lower monthly payment on mine ( I pay 500 / month now). I don't plan on re-affirming. I am current on the car payment but am thinking of missing the next payment (due April 16) to maybe put me in a better negotiating situation with the lender.

With the equity in my car, I don't see any way to get them to reduce the principal balance. I just want the interest rate and monthly payment reduced. Maybe convincing them most people are not buying SUVs now plus the reduced amount they'd get at an auction may work.