After Discharge, Can I Settle with Bank on Car

[drowning123]

After I'm discharged, would it be OK to call up the bank that has my car loan and say "How about I settle for $3,000 and call it a day?" If they agree, I'd ask for something in writing agreeing to the $3,000 settlement and releasing the lien. The balance on the car is $11,000. I wouldn't need a 1099 for $8,000, since I'm no longer responsible for the loan after discharge, correct?

[ccsjoe]

You owe 11K, want to settle for 3K. No you wouldn't get 1099'd if it is discharged, however....how much is your car worth? In my opinion, this will just get the lender to repo it faster since you are forcing the asset onto their radar screen. I think you have very little leverage as they have the right to repo and sell anyhow, if they can get your 3K or more, why would they take you up on it?

[drowning123]

It's worth about 9,000. I think I'd be saving them some money and a whole lotta hassle. The car is 6 years old. It needs some body work and some detailing. It's in good condition, no major problems. By the time they repo, store, detail and repair, they wouldn't profit that much.

[ccsjoe]

Frankly I think you'll be making a mistake. If I were them, and making a business decision, I'd repo. By the time they're done they wouldn't profit as much, but would still get more than 3K. Don't put it on their radar. Just my opinion.

[drowning123]

I won't. You're right. I haven't heard a darn thing from them since August, and I stopped paying in July. Until I hear from them, I'll keep on drivin'!

[aquavir]

I was thinking of doing the same thing. I'm not concerned about repo because in CT they can't take the car unless you stop paying. I'm just wondering if they would bite, since I am current and not willing to walk (i.e. stop paying) at this time. But I was wondering if the fact that I could walk at any time would make them want to get a lump sum now. I may not do it for moral reasons as well...but I have been mulling it over.

Anyway, you should check and see if NY has a similar law making it illegal for them to repo simply because of BK.

[drowning123]

They probably have every right to repo since I'm behind on payments. Anyway, I'll just wait and see. Thanks for the pointers.

[aquavir]

They probably have every right to repo since I'm behind on payments. Anyway, I'll just wait and see. Thanks for the pointers.

Well then I guess you are probably more likely to get a settlement now (than if you were current), but ccsjoe is right; if you can't come to an agreement then it might hasten the repo. However, since the debt is discharged they can't send you a bill, and I wonder if they will even send you warning of the repo, so you may not get an opportunity to settle. Tough call, but you might want to call with the settlement offer...they may take it (or something similar), and the worst thing that can happen is they don't take it and they repo the car. If you don't call there may be no chance of a settlement and you will eventually lose the car anyway.

Good luck with a hard decision.

[tcreegan]

Hi drowing,

I think it is a situation of 'nothing ventured, nothing gained'

You aren't paying and are discharged, so what do you have to lose? Keep driving until they make noise about repossessing, then make your offer. Most places have a period of time for the debtor to 'redeem' or 'cure' the note. Perfect time to make an offer.

Tom in Colo

[ccsjoe]

Now that we know the entire picture, then I would, like Tom says, wait until they make noise, then make the offer.

[drowning123]

Keep driving until they make noise about repossessing, then make your offer. Most places have a period of time for the debtor to 'redeem' or 'cure' the note. Perfect time to make an offer.

Tom in Colo

See, this is exactly what I was thinking. Let them stir up the ant hill. LOL. Thanks guys!

@aquavir. . . I don't care if I keep the car or not. I will have about $8,000 saved up by the time I'm discharged. I was going to try to find something for about $5,000 cash (no note), but I thought if I offered them $3,000, I'd be saving $2,000 and not worry about signing new papers and taxes and all of that stuff. When they come a knockin', then I'll make an offer. I'll see how it goes. Thanks for your advice.

[aquavir]

Hi drowing,

I Keep driving until they make noise about repossessing, then make your offer. Most places have a period of time for the debtor to 'redeem' or 'cure' the note. Perfect time to make an offer.

Tom in Colo

I agree...unless you live in a place where you wake up one morning to an empty driveway. I'm not sure how legal that is, but I've read a bunch of stories on the forum detailing similar occurrence. If they don't repo for a year, then you'll feel pretty good about the whole thing, but if they take it next week and won't talk to you about settling the debt on a car they've already taken you might be a bit annoyed. I guess "six of one..."

[aquavir]

See, this is exactly what I was thinking. Let them stir up the ant hill. LOL. Thanks guys!

@aquavir. . . I don't care if I keep the car or not. I will have about $8,000 saved up by the time I'm discharged. I was going to try to find something for about $5,000 cash (no note), but I thought if I offered them $3,000, I'd be saving $2,000 and not worry about signing new papers and taxes and all of that stuff. When they come a knockin', then I'll make an offer. I'll see how it goes. Thanks for your advice.

I missed that you didn't have a discharge yet. I would wait too; especially if your state requires "a period of time for the debtor to 'redeem.'" The nice thing about having the discharge is that your not personally liable any more, so it's really just about what works best for you...I love that feeling!

[drowning123]

My bank is not even local, which I hope will give me some time, although all it takes is a phone call to a repo company. LOL. I'll see. Thanks again.

[HHM]

The problem is, car lenders don't settle. Not in the sense you are thinking of. Theoretically its possible, but honestly, I have never heard of anyone getting it done. And you will certainly not settle for less than the car is worth.