Repossession

[MeLLE159]

I'm wondering if there is a difference in giving a car back before filing BK or after as far as the way its reported on your credit report? I'm looking at purchasing a used car for cash until I get my credit back in order, but I can't afford to continue insuring and making payment on the car loan that I have. Any help is appreciated.

[IBroke]

I'm wondering if there is a difference in giving a car back before filing BK or after as far as the way its reported on your credit report? I'm looking at purchasing a used car for cash until I get my credit back in order, but I can't afford to continue insuring and making payment on the car loan that I have. Any help is appreciated.

Are you current on the loan? If so, I would strongly recommend that you keep on making the payments on your car loan until you file for BK. This would be the best solution in regards to credit-reporting. On your petition, you can indicate that you want to surrender the vehicle. The cool thing about that is that you can stop making payments on your car the day you file and drive it for free until they ask you to return it - and that can take a while.

And the credit-report? Well, if you stay current and don't return the car prior to filing, the phrase "repossession" won't show up on your credit-report.

[MeLLE159]

Hi Ibroke that definetly answers my question. My concern is that I don't want it on my CR as a repossession and you cleared that up for me! Thanks for the info

Are you current on the loan? If so, I would strongly recommend that you keep on making the payments on your car loan until you file for BK. This would be the best solution in regards to credit-reporting. On your petition, you can indicate that you want to surrender the vehicle. The cool thing about that is that you can stop making payments on your car the day you file and drive it for free until they ask you to return it - and that can take a while.

And the credit-report? Well, if you stay current and don't return the car prior to filing, the phrase "repossession" won't show up on your credit-report.

[tobee43]

Me.....

we voluntarily surrendered our car prior to our filing. we had NEVER been late with a payment...but knew that since the job loss we would not longer be able to afford the payment we would not be re-affirming the loan.

we called the credit union and told them we want to surrender it...they said they'd have to call their atty because up until us...they simply never ever had anyone voluntarily surrender a vehicle.

i further explained to the credit union, that we had enjoyed a wonderful working relationship for over 30 years and we were now leaving the state...we felt it unfair to them....being the credit union to have to come and retrieve the car 1700 miles away.

it took about 2 weeks...i prepared documents with a release...the credit union which really had NO place for us to bring the car, did, in fact find a place to take it in for us. we drove it there...took tons of pictures on their lot, had them sign the release.....left.

listing the entire amount on the chapter 7 petition...listed the auto as have been surrendered....end of story...no problems.

i would think it would depend on how you chose to handle it.

[backtoschool]

Are you current on the loan? If so, I would strongly recommend that you keep on making the payments on your car loan until you file for BK. This would be the best solution in regards to credit-reporting. On your petition, you can indicate that you want to surrender the vehicle. The cool thing about that is that you can stop making payments on your car the day you file and drive it for free until they ask you to return it - and that can take a while.

And the credit-report? Well, if you stay current and don't return the car prior to filing, the phrase "repossession" won't show up on your credit-report.

I totally agree with IBroke's approach. Having a repossession on your credit report will hurt you for years, and it is much better to have the car included in the bk and surrendered then. A repossession on your credit report is the most damaging thing you can have when you go to get a new car loan in a couple of years. You will pay thousands in extra interest for having that repossession on the report. Make the payments until you file bk, and then you can surrender the car when they file for a lift of stay and ask for the car back.

[tobee43]

backtoschool is correct in respect to the repo....that is one of the MAIN reasons why we surrendered it.

[MeLLE159]

Tobee, thanks so much for the input. Now in your case how did it appear on your CR? I feel the same way as you I really just want to give it back and move on with my fresh start.

Me.....

we voluntarily surrendered our car prior to our filing. we had NEVER been late with a payment...but knew that since the job loss we would not longer be able to afford the payment we would not be re-affirming the loan.

we called the credit union and told them we want to surrender it...they said they'd have to call their atty because up until us...they simply never ever had anyone voluntarily surrender a vehicle.

i further explained to the credit union, that we had enjoyed a wonderful working relationship for over 30 years and we were now leaving the state...we felt it unfair to them....being the credit union to have to come and retrieve the car 1700 miles away.

it took about 2 weeks...i prepared documents with a release...the credit union which really had NO place for us to bring the car, did, in fact find a place to take it in for us. we drove it there...took tons of pictures on their lot, had them sign the release.....left.

listing the entire amount on the chapter 7 petition...listed the auto as have been surrendered....end of story...no problems.

i would think it would depend on how you chose to handle it.

[MeLLE159]

Backtoschool, I figured you would say that as well. I know I definetly don't want it to show up as a repossession on my report that was why I asked the question. ;) I appreciate the advice I will just keep paying until I file!

I totally agree with IBroke's approach. Having a repossession on your credit report will hurt you for years, and it is much better to have the car included in the bk and surrendered then. A repossession on your credit report is the most damaging thing you can have when you go to get a new car loan in a couple of years. You will pay thousands in extra interest for having that repossession on the report. Make the payments until you file bk, and then you can surrender the car when they file for a lift of stay and ask for the car back.

[tobee43]

Tobee, thanks so much for the input. Now in your case how did it appear on your CR? I feel the same way as you I really just want to give it back and move on with my fresh start.

so far...and we just got our first report...it just indicates 0 balance under chapter 7 discharged. no repo...nothing like that...

however, we got a copy of our report a bit earlier than i wanted to...because it was a freeby...i don't know if it might change so i'm going to have to keep a "careful" eye on it.

but for now...the CR seems fine and i really think the credit union appreciated what we did instead of having to chase after us. and your correct....we just wanted to move on. (our scores after discharge are 690 and 685).

i wish you the best of luck whichever way you decide to handle the situation. remember what is correct for one is not necessary right for another... do what's BEST for you.

[backtoschool]

I am concerned that if the OP returns the car before filing bk, that it will report as a separate negative item and will not report as included in bk. That is why I was suggesting to wait until filing to turn in the car.

[IBroke]

I am concerned that if the OP returns the car before filing bk, that it will report as a separate negative item and will not report as included in bk. That is why I was suggesting to wait until filing to turn in the car.

Exactly my thoughts, backtoschool.

"Voluntary repo" as account-notation is on my mind...

[tobee43]

point well taken and given.

our's sit's presently on our report as 0 balance included in bk chapter 7. it says nothing about Voluntary repo" ...AS YET!! who knows by the next time we seek the report. i expect changes. but i see it now right in front of me...so far so good.

[IBroke]

point well taken and given.

our's sit's presently on our report as 0 balance included in bk chapter 7. it says nothing about Voluntary repo" ...AS YET!! who knows by the next time we seek the report. i expect changes. but i see it now right in front of me...so far so good.

CUs are often much easier to deal with and since you clearly told them what is going to happen, they certainly weren't in a mood to give you a hard time. There are much more flexible in those situations as major banks. If there is a problem, you can talk to somebody face to face. I just wouldn't want to deal with a "no face"-company like Ford Credit, Honda Financing or any other huge lender when it comes to credit-reporting of events that are not usual business - like you voluntary surrendering the car prior to BK.

It reminds me of my early days in the States where we got our first auto-loan with Ford-credit. Sometimes, money got a little tight and we had to "stretch out" the payment and send in the check 28 days late by certified mail to avoid a late notation. They always received it in that 29 day window but at least reported me late 5 times. It was a hassle to get that removed - and a voluntary surrendering (and I honestly don't know if there is a legal difference to a voluntary repo) might cause an even bigger headache.

But as you said, you cleared up things in advance and the 30 year relationship probably helped as well.

However, if anybody else reading this is thinking about doing the same, get yourself protected and have the lender certify in writing that such a surrendering won't result in any derogatory credit-reporting.

[keepinitreal]

Everybody's situation is unique. In our situation, we had one car with over 100k miles and cross-collateralization with a $5k unsecured line of credit, so we knew we wouldn't re-affirm.

My wife got a car in her name while her credit was still good, then once that was taken care of, I voluntarily returned my car to the credit union. They auctioned it off, and my now-unsecured loans to the credit union were wiped out by the bankruptcy.

We were afraid we wouldn't be able to get a car loan after we filed for bankruptcy, so we did the purchase and surrender before filing.

[tobee43]

IBroke: However, if anybody else reading this is thinking about doing the same, get yourself protected and have the lender certify in writing that such a surrendering won't result in any derogatory credit-reporting.

that is the key...i had paperwork in hand....a signed release and agreement. and, you are correct, i do believe our long term standing relationship with a state credit union most likely yeilded a better outcome that dealing with a large no-face bank.