To redeem, or reaffirm, or surrender, or simply retain??? THAT is the QUESTION...

[quest42]

Here is an odd scenario:

I bought a used 1998 truck in 2001 for $10,000.

My truck is insured... If it gets totalled, the insurance pays book value -- I think... about $3,500 -- as of today.

But, my 4-year vehicle loan (rule of 78 - bummer!) has another year left to pay off... a balance now of about $4,000.

So, I think I could "redeem" the truck by paying $3,500 - the book value, right??? (IF I had that money laying around... my homestead/wildcard exemption is $18,675 - California system 2... my total assets are less than $10,000...)

IF I could redeem, then it seems the lender loses $500? Right??? Essentially, the future interest I would be paying in the next year...

However, IF the car was totalled today, the insurance would pay the lender (lien-holder) $3,500 -- and then I would have to make up for the loan balance with another $500... yes?

Any comments?

Now, I am wondering... Should I try to scrape up that $3,500 to redeem??? IF so -- how, exactly, does redemption work?

[StaciMM]

W/ redemption you basically negotiate a payout based on fair market value.

If you can't scrape up the $$, reaffirming might not be a bad idea since you only have a year left-as long as you are very confident you won't have a problem making those payments.

[quest42]

THANKS again, Staci.

... reaffirming might not be a bad idea since you only have a year left-as long as you are very confident you won't have a problem making those payments.

I suppose I should contact the lender and see what they want... I'll reaffirm if needed... but I owe 133% of the book value, so they probably want me to just keep paying!? It's better for their business than to repo it, especially since it needs a new transmission soon!

I haven't missed a payment in over a year... and they will forgive one missed payment a year if you pay the late fee...

[quest42]

RETAIN ... REAFFIRM ... REDEEM ... or SURRENDER ???

I suppose, if there is the future risk of a deficiency judgement if I defaulted on the loan... or had a loss that the insurance would not cover... it is best to SURRENDER... since I have a chance to get out of it!

I just read this: http://www.canb.uscourts.gov/canb/Do...7?OpenDocument

13. The attorney, as appropriate and necessary, where requested by the debtor:

a.negotiates with a secured creditor to confirm the enforceability of the security interest and the redemption value of said security;

b.files a motion to set the value and redeem said security; or

c.negotiates a reaffirmation agreement having fully advised the debtor of the legal effect and consequences of the agreement and any default thereunder, including the possibility of a future deficiency claim against the debtor, and being persuaded that such agreement represents a fully informed and voluntary agreement by the debtor and does not impose an undue hardship on the debtor or a dependent of the debtor.

SO, I am now considering SURRENDERING it...

[quest42]

Surrender It?

How does a SURRENDER work??? What will happen, and in what timeframes???

I did NOT check any of the boxes (exempt, reaffirm, redeem) but simply listed it under "retain" on my Ch. 7 Statement of Intention.

My 341 meeting is 11/17. My next $283 payment is due on 11/16... otherwise I have kept my payments current...

The www.kbb.com says the book value is about $3,500 and I owe (woe) $4,500 and the vehicle -maybe- needs a new transmission -- at $1,500 plus labor!

NOW, I am thinking, it would make good sense to SURRENDER it, not make another payment!!!

Why keep making payments on a car with negative value??? I can save $283 per month, and borrow a car when I need one for a few months...

What can I expect -- what will happen if I simply stop making payments.... I guess I can delay a few weeks... but, how does a SURRENDER -- or repo -- work?

ANYBODY have some experience - or friendly advice - in this situation?

[AAAArt]

Surrender is similar to a repo, but you make the arrangements where thwy can pick up the car or you take it.
Your other options...
Retain...you keep making payments and is they are on time, usually the co, doesn't bother you and/or change your int. rate or payt. amount. But can take car if you are late.
Re-affirm...You enter into a binding legal contract w/ lender. Everything remains the same and if you cannot make payments in the future, then you still owe them the balance.
722 redemption...Do a search on this forum under those words. This may be your best alternative.
Negotiate w/ lender...Not always successful, but sometimes wortha shot. For expample, they may get KBB trade-in value for the car, but often get less than that, see if they'll accept less on a new loan w/ perhaps higher int. rate (Don't get fleeced) on a lesser payt. over a slightly longer time.
Example...Dear xxxx (get name of person...never send "to whom it may concern" or "Dear Sir or Madam")
I currently have a loan on a xxxx. My acct. # is. I am in the midst of declaring Bk. The value of the vehicle is far less than what I owe. I would like to make a good faith ofer to you. Would you be willing to refinance this vehicle for $3000 over a 2 year period at 12% interest? If so, I would like to keep the vehicle. If you are unable to do this, I understand and will have to consider all alternatives. Thank you for your time and consideration. Sincerely, xxxx
Those are the options as I see them.

[quest42]

AAAArt - thanks, that was helpful info!

[AAAArt]

AAAArt - thanks, that was helpful info!

You're very welcome. I hope that it was and will be helpful, but remember that all you asked for was "friendly advice". Well it was free and friendly.
Hope everything works out well. Keep us posted. Art

[quest42]

[bkfiler]

craigslist.org my brother

[quest42]

www.craigslist.org -- I'm on it!

[jimbo]

Retain...you keep making payments and is they are on time, usually the co, doesn't bother you and/or change your int. rate or payt. amount. But can take car if you are late.

I retained one of my vehicles rather than reaffirm. Can I later surrender the vehicle without any issues if I need to? I am a little concerned about my financial post BK and my have to give up the vehicle.

[quest42]

Thanks again to all for all your help!

[quest42]

I retained one of my vehicles rather than reaffirm. Can I later surrender the vehicle without any issues if I need to? I am a little concerned about my financial post BK and my have to give up the vehicle.

Retain gives you more rights than to reaffirm, I think.

Yes, I think you can surrender at any future time if it was included in your bankruptcy.

Just my best guess, better ask an attorney...

[bkfiler]

that poster has already dealt with his issue. his post was quite awhile back lol.

however, you are right, if you just keep it and pay on it you arent required to do so and can give it up at any time. nothing happens anymore to your credit report on this. also, if you miss a payment by 1 day then can come take it from you.

im still not sure why they cant just come take it from you anytime thety want anyways. like just before the last payment is made lol. that would suck! haha

if you reaffirm then you are legally obligated to keep paying for it. your credit record reflects your payments and they usually dont take it from you if you are behind in payments unless it gets bad.