Should I reaffirm my car loan?

[wnguyen]

Hi everyone

I have 3 weeks from now until the 341 hearing. Currently I have a car loan with Toyota Financial and the outstanding balance owed is close to $28,000 with 4 years left. The monthly payment is $630. Should I reaffirm this loan or just surrender the car? If I surrender the car, I will have really tough time looking for a decent car after Chapter 7 discharge.

Thanks and appreciate all input.

[mrskal]

I dont think it is as hard as you think, search the forum. Lots of people have gotten loans for cars. You may be paying a higher interest rate, but are you sure you want that huge payment that you have now? Wow!

[wnguyen]

mrskal

You're right but right now I don't have any other choice except getting rid of the car or keep it by reaffirming it. Redeeming it is out of the question now. I'm still current to the loan.

[mrskal]

What I am saying, is, you will most likely be able to get a loan on a new car. I would not reaffirm the current car, it costs too much. If you really want that car that you have now, and want to pay that high of a price every month, then reaffirm it.

For me, coming out of BK, or any time for that matter, I would not want a $630 car payment.

Now I am curious, what kind of car is it that has that high of a payment?

[wnguyen]

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[wnguyen]

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[dumpinmydebt]

I would just ride through on the car. That is really going to screw you over if you reaffirm that. Do you really want to be stuck with that payment for the next 4 years? The point of bk is to get out of debt and get a fresh start.

You can ridge through. Keep paying on time. There is a chance they could repo, but it seems pretty unlikely if there is no equity. Then save money until you can get another car or a used car loan. Then you can ditch that expensive car.

[offthewall]

wnguyen, I have a similar situation...I hope to be filing late summer/early fall. I was advised by my attorney to get rid of my (much loved) 8 year old, paid in full Tundra and get a new car. The payment would help my chapter 7 qualifying. Also, I agree with my attorney that being a single woman with a sales job that keeps me on the road, I needed a new, reliable vehicle to transport me, which I would not have to worry about for at least a few years.

I also need a large vehicle to hold materials and product I transport to trade shows. A Corolla (or any sedan) for that matter, could not possibly handle the size and quantity of materials I sometimes have to transport. I ended up with a 4Runner, which I feel comfortable with....I feel very comfortable with the Toyota product, despite the recent problems they have had.

My payment is in the high 500's. This is a lot, but given alternatives, I won't have a problem reaffirming....I certainly do not need to worry about my bread and butter lifeline being repossessed. I rent, so the vehicle will be my only asset, once it's payed for. If I have to, I will get a 2nd part-time job (again!) to help pay it off early. And I hope the on-time payments I make will eventually help me build back better credit. I can live out of that vehicle if I have to!!! At least I got 2 years free maintenance with the deal!

[wnguyen]

dumpinmydebt

I totally agree with you about the reaffirmation. 4 years is a long time, that's why I was so concerned whether or not should I reaffirm. I have to admit that I love that car. Now I'm gonna choose not to reaffirm. I've heard that they insisted on the reaffirmation and my lawyer said that don't sign any promises in writing without consulting with her first. Thanks for your advice. Very helpful and gave me more confidence.


Offthewall

I too am emotionally attached to my car. I also think that their products are fine but the way they conduct their business, at least from an ethical point of view, is too greedy and hypocritical. One thing about reaffirmation is that you're stuck with that debt after bankruptcy and if something happens, you're totally liable for the outstanding debt. That's why it's pretty scary for me (yes I am afraid, scared, especially during this time). I will get a second job if there's one out there Best of luck with you on the filing. I've just file a little over a week ago.

[dumpinmydebt]

We're doing a ride through as well. I mean, I have like 3 years left on my loan and our payments are only $300 a month. I just want a fresh start. I don't want to be tied down.

[Logan]

I would just ride through on the car. That is really going to screw you over if you reaffirm that. Do you really want to be stuck with that payment for the next 4 years? The point of bk is to get out of debt and get a fresh start.

You can ridge through. Keep paying on time. There is a chance they could repo, but it seems pretty unlikely if there is no equity. Then save money until you can get another car or a used car loan. Then you can ditch that expensive car.

This is what I did. 6 months after my discharge I no longer wanted my car so I called and told them to come and get it. I fell through the cracks and drove it for another 2 months.

Do NOT reaffirm.

Logan