Surrendering a car and filing chapter 7

[musclecar75]

Hi guys!

I am filing a chapter 7 (no attorney, can't afford one. Am using We The People to assist me in this.) I have an auto loan with Wachovia and am thinking of surrendering the vehicle. What are the pros and cons of surrendering the vehicle, versus reaffirming the loan? Also, if I reaffirm the loan, what are my chances of getting my payments lowered? I live in California.

Thanks!

[justbroke]

Generally speaking, reaffirmation would mean keeping the loan at the same interest rate and same balance. If you are upside down, not only is this not a good thing to do, there is no Judge that would let you reaffirm that debt.

There is a redemption process, but if the car is relatively new (less than 2.5 years old), then you can't redeem it anyhow.

[musclecar75]

Generally speaking, reaffirmation would mean keeping the loan at the same interest rate and same balance. If you are upside down, not only is this not a good thing to do, there is no Judge that would let you reaffirm that debt.

There is a redemption process, but if the car is relatively new (less than 2.5 years old), then you can't redeem it anyhow.

Thanks for replying. I have another question:

My car is 8 years old (as of 2010) and I've this auto loan for 3 years. The balance of the loan is about 7,000. According to Kelly Blue Book, the suggested retail value is about $6900.00, so I'm not that upside down as of now.

How do I go about going through a loan redemption process?

[justbroke]

I don't know if you'd want to use redemption... a ride through would be the best. In any event, Redemption, through places like 722 Redemption (USBank) usually have higher interest rates and could make it un-affordable to redeem. Work with your attorney to see if a ride-through is available.

[musclecar75]

I don't know if you'd want to use redemption... a ride through would be the best. In any event, Redemption, through places like 722 Redemption (USBank) usually have higher interest rates and could make it un-affordable to redeem. Work with your attorney to see if a ride-through is available.

What is a ride through? And btw, I am not working with an attorney (I can't afford one) I am having a document preparing service assist me with preparing the docs and will file myself.

[justbroke]

A ride-through is where... if you're current on your automobile payments, you select "nothing" as for the disposition of the car. For example, you usually need to select "redeem", "surrender", or "reaffirm". in some States, you can choose a fourth option by not selecting anything on your Statement of Intentions. This is the "ride-through". This is where you keep the vehicle under the original terms. You keep paying on time. The loan is discharged and you can "walk away" from the vehicle at any time after discharge with no penalty! However, some lenders don't like this (Ford, Chrylser are examples).

[musclecar75]

[QUOTE=justbroke;347155]A ride-through is where... if you're current on your automobile payments, you select "nothing" as for the disposition of the car. For example, you usually need to select "redeem", "surrender", or "reaffirm". in some States, you can choose a fourth option by not selecting anything on your Statement of Intentions. This is the "ride-through". This is where you keep the vehicle under the original terms. You keep paying on time. The loan is discharged and you can "walk away" from the vehicle at any time after discharge with no penalty! However, some lenders don't like this (Ford, Chrylser are examples).[/QUOTE]

Ok, what do you mean by the loan being discharged and being able to walk away from the vehicle with no penalty? If I decide to do a ride through, that means I keep paying on the car until paid in full, right? How then can it be discharged? And what does it mean that there would be a penalty if I walk away from the vehicle? After a bankruptcy, for any reason, would I not be able to still surrender the car?

[justbroke]

Ok, what do you mean by the loan being discharged and being able to walk away from the vehicle with no penalty? If I decide to do a ride through, that means I keep paying on the car until paid in full, right? How then can it be discharged? And what does it mean that there would be a penalty if I walk away from the vehicle? After a bankruptcy, for any reason, would I not be able to still surrender the car?

If you do the "ride-through" that means that the debt is discharged. It means that you do not technically owe anything to the lender. However, they still have their lien on the vehicle. If you continue to pay on time, they have no reason to (and in most States, no legal cause to) repossess the vehicle. The nice thing is, that should you decide or can't afford the car anymore, you can just return it to the lender... and you owe nothing.

If you keep the car and pay it off... you get the title just like normal.

[musclecar75]

If you do the "ride-through" that means that the debt is discharged. It means that you do not technically owe anything to the lender. However, they still have their lien on the vehicle. If you continue to pay on time, they have no reason to (and in most States, no legal cause to) repossess the vehicle. The nice thing is, that should you decide or can't afford the car anymore, you can just return it to the lender... and you owe nothing.

If you keep the car and pay it off... you get the title just like normal.

Ah I see! So in order to do a ride through, I have to be current with my payments then, correct? I cannot be at least two payments behind?

[justbroke]

Ah I see! So in order to do a ride through, I have to be current with my payments then, correct? I cannot be at least two payments behind?

You may not be even 1-day behind. If you are behind, then the lender will file a Motion for Relief From Stay (MRFS) and seek to repossess the vehicle! You can't be late at any time during a ride through since you are contractually not liable for payment.

[musclecar75]

You may not be even 1-day behind. If you are behind, then the lender will file a Motion for Relief From Stay (MRFS) and seek to repossess the vehicle! You can't be late at [u]any[/i] time during a ride through since you are contractually not liable for payment.

I see.

You have been extremely helpful....thank you so much for answering my questions!