Buying a car before filing ch 7

[bkelen]

We are planning to file Ch 7 in Texas pretty soon pro se (within the next week) and we are planning to give the car we have now back (We owe too much for it to be worth keeping)

We do however, need a vehicle, so should we try to buy a newer car before we file? Our credit is craptastic, so I know we wont get too great of a deal, but we dont mind having the same payment for a more reliable car than what we have. I dont want to mess anything up.

[disconapper]

You could keep the car you have, file with an intention to reaffirm but not sign and stop making payments. This will buy you time in your current vehicle and allow you to save money for a clunker car or a hefty down payment on a new car loan. Once you are filed your car can not be repossessed until, I think, 45 days or so after your 341 meeting. There are lenders that will give car loans post filing, more so post the 341 meeting.

OR..you could file an intention to reaffirm with your petition, keep the car after you file, not sign and continue to make payments during and after the bankruptcy. Depending on who your lender is they might allow you to "ride through" the loan without a reaffirmation agreement, meaning as long as you are paying, you are staying in the vehicle. And this scenario also relieves you of the debt all together (just like the one I wrote above) because the debt is discharged in the bankruptcy. So, if at some point after discharge, you are unable to continue the ride through, you can call your lender and tell them to come get the vehicle.

[keepmine]

If you need a more reliable ride, get that lined up prior to filing.

[bcohen]

I would probably try to drive the car payment-free as long as possible. With proper advance planning, you should be able to get a good 3 to 5 months (maybe even more) before the repo man takes it away.

[disconapper]

I would probably try to drive the car payment-free as long as possible. With proper advance planning, you should be able to get a good 3 to 5 months (maybe even more) before the repo man takes it away.

That's exactly what I'm doing.....my attorney has worked with my auto lender quite a bit in BK proceedings...says they are s-l-o-w in their follow up...said he's had people sit in cars with no payment for 6 months to a year....I filed an intent to reaffirm and my lender has of this moment sent zero paperwork, I'm not going to sign it anyway, but my attorney's words are proving to be correct...it's risky though, I'm not worried about the repo man quite yet because I only had my 341 last week...and maintain insurance

[debee]

Buying a new car before filing is allowed. You want to make sure the lien is perfected before filing. If it isn't, the trustee can take the car and sell it. A lot of people get new cars before filing so they know for sure they have reliable transportation going forward.

[overthedebt2]

I have this same concern. I currently have a 2008 Toyota Highlander with 30,000 miles. Out of warranty now and still have payments for 3 more years. Should I try to get a new car now? After BK, it could take years before I get a car loan, correct? I'm just worried that I will have a car payment for many more years still AND the expense of repair, etc on top of it. Any advice??

[keepmine]

I have this same concern. I currently have a 2008 Toyota Highlander with 30,000 miles. Out of warranty now and still have payments for 3 more years. Should I try to get a new car now? After BK, it could take years before I get a car loan, correct? I'm just worried that I will have a car payment for many more years still AND the expense of repair, etc on top of it. Any advice??

You can get a car loan easily enough once discharged. In fact, you'll get tons of offerws in the mail from auto dealers offering "2nd chance progams". Problem is, the interest rate will be nosebleed.
30K miles isn't much at all. If there are no mechanial/maintenace issues on the Toyota and, the payment isn't a stretch why not just do a ridethrough and hangon to the present ride?
If there are issues then, I'd start looking for eliable transportation prior to filing.

[sunshinepa]

If you are not having problems with the car, I would keep it. I personally don't drive a Toyota but my sister has over 270,000 miles on hers and is just now getting to a "repair" point. My neighbor has over 140,000 on his and have never done a thing to it except put on tires and a battery. Why take a new loan when you could drive that car another 3 years without one single problem.

Just my thoughts, but I know I would just pay it off and keep as long as possible.

[bcohen]

I agree with sunshinepa. In my family, we have owned many Toyotas--a 1988 Corolla (bought new), a 1991 Camry (bought new), a 1998 Camry (bought used), a 1991 Tercel (bought used), two 2004 Corollas (bought new), and a 2008 Avalon (bought new). All of the cars were trouble-free up into the 150,000 mile range, except for the Tercel which needed a new engine at 78,000 miles. I think that was due to damage done by the previous owner, as I bought the car with 74,000 miles, and although it looked fine, it had constant mechanical problems. It ran fine after the engine was replaced. However, I know other people that have/had that same model and got 150,000 miles or more out of it.

My point is that if the Highlander has been properly maintained and is not having any serious problems, I'd keep it unless the payment is too high for your current situation. Now, if the payment is outrageously high, or the SUV is having constant mechanical problems, then yeah I'd dump it.

Also, buying a car before bankruptcy is not necessarily better, unless your credit is spotlessly clean up until the day you file. If you already have numerous delinquent accounts, collection accounts, etc, then your credit score will probably increase when your bankruptcy is discharged. So you'd probably be able to obtain a loan with better terms then, compared to what you'd get now!

During the BK case, it should be possible to "string the lender along" and keep driving your car even without making the payments. That way, you can save up to buy a cheap car for cash, or to put down a large down payment on a financed car.

[overthedebt2]

Thanks for all the replies! No problems at all with the car. Payment is actually pretty reasonable since I bought it used. Just worried I wouldn't be able to get another car for 5 years or something. Sounds like that isn't the case though. My credit is still good. Only recently (last 3 weeks) stopped making payments on my CC. That's why I was contemplating getting a new car. I figured I could still get a decent interest rate and have a new car without maintenance for the next 3 years until my credit starts to clear up some.