reaffirming a vehicle not worth what the finance company wants...

[free2ride]

We are planning on converting from a ch 13 to a 7 this week.

My question is in regards to a car that was included in the chapter 13.

I wrecked the car (07 Mitsubishi Galant - 41,000 miles) 3 weeks ago. We owe the finance company $11,300 on the car. It was damaged at between 65-70% and is being repaired now.

Our attorney asked the finance company if they would let us reaffirm the car (but we didn't have the damage % to tell them) and they told us they would let us reaffirm for $359 a month at 10.24% interest for 2 years which is $8624.

My question: would the bankruptcy judge allow a reaffirmation on this vehicle since it's market value would be less than the $8600 dollars? Are the judges real sticklers for letting someone reaffirm on property that is not worth the loan value?

Thanks!

[newbie2]

No idea how the judge will react, but why in the world would you want to reaffirm? Does your state not allow a pay through - ride through?

[free2ride]

No idea how the judge will react, but why in the world would you want to reaffirm? Does your state not allow a pay through - ride through?

Just worried about loosing my only car and I thought if we could get it cheap enough I could drive it for a couple of years until we rebuilt our credit. What is a ride through?

[Pandora]

no GAP coverage? Ouch.... 910 rule doesnt apply for a cram down?

ETA: almost 4 year old vehicle and 10.24%? I'd haggle them down to at least current rate or lower - if you're converting to filing CH. 7, then just let the vehicle go and the deficiency follows suit.

Get another vehicle. For what they want you to pay $359 a month... you could get a newer year model.

[free2ride]

no GAP coverage? Ouch.... 910 rule doesnt apply for a cram down?

ETA: almost 4 year old vehicle and 10.24%? I'd haggle them down to at least current rate or lower - if you're converting to filing CH. 7, then just let the vehicle go and the deficiency follows suit.

Get another vehicle. For what they want you to pay $359 a month... you could get a newer year model.

Yes I had GAP but the ins xo didn't total. Yeah, I'm thinking let it go too. Just hate to do it & be without a car until ch 7 discharges.

[tcreegan]

Hi free2ride,

A bad deal is a bad deal, don't reaffirm. That car is probably only worth ~7K, less if the buyer knows it was nearly totaled.

It's not that the BK judge is a stickler, it's that they aren't supposed to OK anything that is "not in your best interests" Loan at 10% for a couple grand over the car value....

You can still have a car in a BK, lots of people get something right before filing w/ better gas mileage, lower payment, more reliable or replace an old beater ready to die.

After we filed, I think every car dealer in town sent a letter; "BK? We have a deal for you!" We didn't take them up on the offer, but do a search on the forum to see what other people were able to get.

Or you could turn a bad deal into a better deal, the "$359 a month at 10.24% interest for 2 years which is $8624" is their opening offer, counter with $220 a month at 8% interest for 3 years which is ~7K ...and your ace card is "if I don't get terms I can live with, the car goes into the BK and you get to repossess a nearly totaled car"

Hope you can work something out in your favor!

Tom in Colo

[free2ride]

Hi free2ride,

A bad deal is a bad deal, don't reaffirm. That car is probably only worth ~7K, less if the buyer knows it was nearly totaled.

It's not that the BK judge is a stickler, it's that they aren't supposed to OK anything that is "not in your best interests" Loan at 10% for a couple grand over the car value....

You can still have a car in a BK, lots of people get something right before filing w/ better gas mileage, lower payment, more reliable or replace an old beater ready to die.

After we filed, I think every car dealer in town sent a letter; "BK? We have a deal for you!" We didn't take them up on the offer, but do a search on the forum to see what other people were able to get.

Or you could turn a bad deal into a better deal, the "$359 a month at 10.24% interest for 2 years which is $8624" is their opening offer, counter with $220 a month at 8% interest for 3 years which is ~7K ...and your ace card is "if I don't get terms I can live with, the car goes into the BK and you get to repossess a nearly totaled car"

Hope you can work something out in your favor!

Tom in Colo

Thank you for a great post. We tried negotiating with the finance company but no go. They actually suggested we not repair the car & send them the check for the repair costs. Anyway I met with the bankruptcy lawyer today and he is going to tell them we are going to reaffirm the car simply to drag out the motions so that we can use the car for a couple of months. That will buy us some time to find another car. - we were very pleased with that. Our attorney is filing for us on Friday the 11th. Then I guess we begin the waiting game.