Filed - need help figuring out my car situation, please?

[jlynn275]

I would love to pick some brains, get advice on making the smartest/safest decision about what to do with my car/car loan.

We are not reaffirming my car, but were planning to keep paying on it and hope for the best. My attorney's advise (and what my husband wants to do) is stop paying the car, save the money for the next 3 months (while we wait discharge) and get a new buy here/pay here car with a down payment.

My car is worth about $10,000, we owe about $14,000. We were flipped when we purchased the car. It's a 2007 Nissan Altima and I do love the car and need reliable transportation since I drive 90 miles a day for work and it's the car we use for everything. I'm not emotionally attached to it or anything, but I don't want to lose it if I don't have to. My husband drives an old beater to work and back, that's it. My car payment is $391 a month.

My confusion is this...
We are negative about $500 a month now, so without paying our mortgage ($1300) and not paying our car ($391) we would only be able to save about $3000 by discharge, if nothing unforeseen happens. Since we are also giving up our house I need every penny I can save to go towards first, last, security in case we are kicked out sooner rather than later. If I put all the money we save into a down payment on a car and we get foreclosed quickly we are screwed.
Then the flip side, why pay for a car we are so flipped on? Do we pay now, through the BK and then stop paying down the road and hope they don't repo it in the meantime? I don't like the thought that they can come take it whenever they want WHILE we are paying for it.

Thoughts???

[researchnerd]

The first step is to decide whether you want to keep the car. My own feeling was...if I'm going through the trouble and expense of BK to get rid of my debt, I'm going to get rid of every cent of debt I possibly can. $4k isn't a ton of negative equity, but if they repo your car and sell it at auction, it is likely to be closer to $6-$8k -- which would be nice to walk away from. On the other hand, if your car is reliable (incredibly important with a long commute) and close to being paid off, you may want to keep it instead, rather than take a risk at a potentially sketchy buy here/pay here lot. How much longer do you have to go on the payments?

Re potential repo, a lot of it depends on your lender. Ford and Toyota are known for repo'ing cars unless reaffirmed, even when all payments are current. Other lenders are fine with letting you keep the car as long as you keep paying on time.

If you are current on your mortgage, I suspect you have a while to go before foreclosure. I'm not sure about the timetable in FL, but here in GA (one of the quickest foreclosure states) we had a full 5-6 months. I'd say, work out the car issue first and then save $$ for your move.

[jlynn275]

Thanks for your thoughts. We have 3 more years to pay on it, so it's definitely not close to being paid off. We will not be reaffirming for sure, so my thought was that if we choose to, we could stop paying down the road and let them have it with no harm to us - and then we will have more time to save. We are not current on our mortgage, going on 3 months behind, but we are just about to enter "default" when our petition is officially filed (this week). So I expect I have at least 6 months, with the 3 month stay...hopefully more. The foreclosure process has not started, so once we are filed with the courts does my default situation pick up where it left off before filing?
My attorney advised me to go shop around to see what I am looking at in terms of cars and payments if I decide NOW to stop paying. I don't want to throw $1200 at my car for the next 3 months to just turn around and let them have it after discharge, ya know? But the time frame to save if we stopped paying now stresses me out!!

[jlynn275]

anyone else have any advice by chance?

[drowning123]

With so much left on the car loan, I would stop paying and start saving. Put a bigger downpayment on a car with a shorter term - say 2 years instead of 3 that you have left on the Altima. This way you'll have a much newer car and possibly lower monthly payments with a shorter term. That's just my 2 cents. You won't be kicked out of your house just yet.

[telco95]

I would probably keep the car. If you go to a buy here pay here, you will pay over 20% interest on a vehicle with high mileage and will probably have to put down a down payment. It might be cheaper just to stay with what you have, and if something happens down the road, your not financially responsible for it. I've heard of some places giving you reminder calls before your payment is due and calling you and everybody else when your 1 day late (not that ur going to b late).

[jlynn275]

LOL! Seems opinions are split just like me.

[Clabbergirl]

I'm in a very similar situation. I'm upside down on my '06 Toyota and although I love the car, great gas mileage and I also put about 500 miles/week on it currently, the payment is $395/month. Between the car note and insurance, I'm looking at nearly 35% of my take-home pay every month, and I'm not comfortable with that. Having the car has been one of the reasons I couldn't make all my bills anyway. I've been mulling over this for awhile too, and I do understand the difficulty. For me, I'm going to roll the dice and buy a second-hand car, fingers crossed. I'm well aware of the risk, but I will be saving $ on insurance at least. Luckily my commute will be reduced by 70% in July of next year, so the risk will be reduced somewhat in approx 6 months. I also have AAA in the event I'm stranded somewhere so that gives me a (false, perhaps?) sense of security.

Do you have access to a 'friend' who does mechanical work and could help out in the event of a major repair on a used car? Or maybe would accept a payment plan if you should ever need it?

[jlynn275]

It's a tough call, isn't it? My husband is somewhat mechanically inclined actually (as is my FIL and a friend), but I would hope to find a halfway decent car that it wouldn't be a problem. Since I was flipped going into this car (series of dumb dumb decisions) I could feasibly find the same car and pay less per month on it because I wouldn't have to carry over this loan and I would have a down payment. I think what I will do is go looking to get some idea of what is out there and what kind of payment I could expect before I make a decision. If I am too scared I will know the answer

Good luck to you. It's a good thing you have light at the end of your commute tunnel. I might as well since we are giving up the house - I am hoping to find a rental closer to work.

[dumpinmydebt]

Personally, I am riding through on my car loan until I can save up some money for a large downpayment, and after I have worked on my credit for around 6 months or so, so I can get a decent interest rate.

I have NO desire to purchase a car from a buy here/pay here. I have no desire to be stuck with another 20% + loan for many years. That is what you need to think about. Sure, I am "wasting" $300 a month on a car I will be giving up, but that is far less compared to how much I will save buy not settling for a high interest rate loan. I will ride through on this loan until I get an interest rate I feel comfortable with being stuck with for the next 4 -5 years.