Can my car be taken

[Michellemg]

I have an auto loan and think I may have to file chapter 7. Can you advise me if my car can be taken if I have never missed a payment and have every intention of keeping it and paying on time? Can the bank or the trustee just decide that I have to give it back for any reason?

[drowning123]

The trustee won't decide if you should give it back, but the bank can definitely take it back if you can't or don't re-affirm.

[tcreegan]

Hi Michellemg,

Can the bank or the trustee just decide that I have to give it back for any reason?

The short answer: No

What the BK judge can do is not approve a reaffirmation of the loan (essentially a new post-BK loan) BUT...nothing stops you from just keep paying on the loan and keeping the car. Your lender may require you to sign a reaffirmation agreement, which you can sign (whether or not the judge approves,) keep paying and keep the car.

BUT...if the judge doesn't approve, it is b/c it is not in your best interest to do so.....something you should seriously consider.

Good luck w. your BK filing,

Tom in Colo

[AngelinaCat]

Some institutions will require you to reaffirm; our CU did. We reaffirmed that loan--we only had about another ten months to go. We also reaffirmed an overdraft protection loan. Other insitutions won't particularly care. But, if you have any credit cards or other banking business with that insitution, you would do well to move your checking and savings accounts to another place that has no ties to your loans or CCs. Otherwise these accounts can be cross-collateralized and drained if you fall behind or default on the CCs or loans.

Good luck.

[Michellemg]

Tom, that is the best news yet. So, you're telling me that the lender can't take my car if I continue to make all my payments on time regardless of what the trustee or judge might say?

[NoMoreCards]

There have been posts in here from people who did have their car repo-ed after filing chapter 7 and making all car payments on time.

The lender CAN still decide to take the car, if the loan is not reaffirmed.

[dumpinmydebt]

The lender has every right to the car that is included in the bankruptcy if they want to take it. It does not matter if you are paying on time.

They don't always do this, but yes they can.

This question was answered in your previous thread. http://www.bkforum.com/showthread.ph...f-an-auto-loan

[JSchrader]

What everyone else said is right. Here are a few key facts to keep in mind.
1. If you don't reaffirm (or redeem) the loan, then the creditor can take the car, regardless of whether you are current or not. Not all creditors will take the car when payments are current, but many will.
2. It is up to the lender whether it wants to reaffirm. They almost always do, but it is still up to them.
3. Even if you agree to reaffirm with the lender, the judge can still choose not to allow you to reaffirm if you don't have an attorney, or if you attorney doesn't sign off on the agreement. This might happen if: you can't afford the payment; you owe significantly more than the car is worth; you have other transportation options; you don't drive the car (i.e. your child drives it); or the Judge otherwise thinks its not in your financial best interest.

Many people keep their cars after going through bankruptcy. But you don't have complete control over the process.

[ccsjoe]

Michelle,

The short answer to your question to Tom is no. The lender can take your car. There are some states where there is a legal precedent already set that a repo may not occur if you are making timely payments regardless of reaffirmation agreement; California is not one of those. The only way to 100% guarantee your car will not be repo'd is to reaffirm.

That being said, most lenders will allow a ride & pay arrangement, but not all. Among the notorious repoers are Ford Motor Credit (or any of their subsidiary companies)-I should know, my car is with FMC.

[tcreegan]

Hi all,

When in doubt, check the code:

11 U.S.C. §541(c) prevents foreclosure/repossession for merely filing BK, there needs to be some other breach of contract.

The code also allows the lender to require a reaffirmation agreement.

Tom in Colo

[mikeyisbroke]

I just met with my attorney on this last week. My lender had sent a re-affirm agreement, but attorney advised that I didn't have to sign it and talked to the finance company and while the re-aff is a standard thing, as long as I keep paying on time, they will not repo. He did say that the big 3 usually will repo, but I'm with Honda and he said he's never heard of them repoing a car without a re-affirm.

[Michellemg]

Ok, so I'm finally accepting that my car will probably be taken due to the large payment. Does anyone have any advice on how to get a new car? Do you try it right after you file, wait til it's over or what? I can't imagine I'd be able to get a loan right away and I can't be without a car for even one day. Thanks everyone.

[Pandora]

Ok, so I'm finally accepting that my car will probably be taken due to the large payment. Does anyone have any advice on how to get a new car? Do you try it right after you file, wait til it's over or what? I can't imagine I'd be able to get a loan right away and I can't be without a car for even one day. Thanks everyone.

well given your car payment is close to $1K a month - its going to be hard to get approval for another one unless you have alot of extra $ available to fund it.

I guess your options would be:

stop paying on the car for a few months (before repo happens) - save the $ - and buy a $3K car in the interim

try to keep the car in your BK (going to be hard pressed at the payment I think)

refer back to #1

Sorry... thats all I can think of

[wnguyen]

Hi Michellemg

I was up and down like a rollercoaster on this issue for the last couple of months. First I've heard that if you don't reaffirm the loan, the lender will take your car regardless of your payment status. Then I called my creditor, which is Toyota, and they told me if I don't reaffirm, they won't take the car as long as I'm current on the loan. Then they sent my lawyer the reaffirmation paperwork. Now my lawyer told me to disregard it and keep making payments until it's paid off. So now it seems that it depends on the lender/creditor. If your creditor is Ford (and probably GM and Chrysler but I'm not sure), then reaffirmation is a must, otherwise they'll take your car, regardless of your payment status, unless your loan balance drops below $5000. Others, such as Toyota, won't repo your car if you're current.

[LaurieM]

Ok, so I'm finally accepting that my car will probably be taken due to the large payment. Does anyone have any advice on how to get a new car? Do you try it right after you file, wait til it's over or what? I can't imagine I'd be able to get a loan right away and I can't be without a car for even one day. Thanks everyone.

At almost $1,000 per month for a car payment, you'd have to be earning approximately $7200 per month in gross income to even make owning a car like that feasible based on the suggested budgeting percentage listed below (ppl would argue some of the percentages but the ones below are reasonable).

Getting a different vehicle, either prior to or after filing bankruptcy is not as difficult as one might imagine. People who do not know any better believe that you cannot get credit post-filing... not the case... actually you become a prime target for certain lenders post-filing because they can charge you exorbitant interest rates (because you've filed) and because they know there's no risk of you filing chapter 7 for another 8 years. You WILL pay a higher rate of interest (probably in the neighborhood of 25% interest) post-filing.

The idea someone else posed of stock piling some cash and buying a $3K vehicle is the best one I've seen thus far. That way you can save up for a down payment on a more reliable vehicle... the more downpayment you have, the better a rate you'll get because the loan to value ratio is more attractive to lenders. As an alternative, perhaps a family member has a 2nd vehicle, not being used which you could borrow while you find alternative transportation?

Housing (mortgage/rent, Real estate taxes) 24%
Utilities (water, power, garbage collection, 8%
Food 14%
Clothing 4%
Medical/Healthcare 6%
Donations/Gifts to Charity 4%
Savings and Insurance 9%
Entertainment and Recreation 5%
Transportation (car payments, gas, service) 14%
Personal/Debt Payments/Misc 12%