I guess I need some advice here....keep the car or surrender?

[soccermom850]

First of all thank you in advance for any suggestions. This is my first post here.
My 341 meeting is June 1st.
Chapter 7
Only secured asset is 2004 BMW X3, 107,xxx miles on the car.
KBB values it at 10k, 11k, I only owe 1500 left on the car.

In AZ, the exemption is $5,000 for a single filer (which I am...)

My attorney has told me I will have the option to keep the car, and pay the trustee the difference of what it would be sold for at auction, which could be anywhere from 3k-5k.

Now, this car has 107k miles on it.....do I take the 5k exemption, and run with it? Use the 5k as a down payment? Owing a possible 10k on a car that has 107k miles on it is not appealing to me at all.....when I could get another car that is newer with less miles on it for maybe 12-15k?

Also, what APR am I looking at from a reputable AZ dealer when I get the discharge?

Lastly, am I correct that if I surrendered the car it would be AFTER the discharge, correct?

Again, thank you for any help!!

[SMinGA2]

You won't owe $10,000 on it.

Worst case scenario, based on what you've said:
Car is worth $11,000
You owe $1,500 and have $5,000 exemption.
The difference is $4,500, you'd need to pay to the trustee beyond what you still have to pay on the remaining loan contract. <--again, this is worst case scenario

But in reality if the trustee were to take the car and sell it at auction, there would be fees involved (to sell the vehicle, which lowers the profit) and cars don't sell for their maximum value at auction. You could make the trustee an offer, perhaps $2000-2500 and pay it off over a year's time at $200 or so per month. In a year's time, you'll have a paid for car. An investment of $4000 or so (including your payoff) and in a year's time it should still be worth almost as much as it is now, so a good trade in value. If you invest another $4000 in it over the next year and can then get $9000 tradein value for it, its the same difference in my opinion as taking $5,000 for it now.

Of you could tell the trustee to sell. Plan to use the $5,000 as a downpayment or to buy a car outright, but you'll be without transportation temporarily. If you surrender the car to the trustee, he/she would take steps to sell it. Not sure at what point you'd have to give it up but obviously the trustee can't sell it while you're still driving it. And the trustee is not going to give you $5,000, wait for you to buy another car, and then sell it. And having to buy a car and hope for the best possible financing is not a comfortable place to be. Been there, don't want to do that again!

Many people report getting car loans right after discharge. Rates would vary, depending on your situation. If you can wait 6-12+ months and take time to clean up your report & get a new account or two established (such as a secured card) then you'd fare better on the rate.

[Drazil65]

Hi, I posted in another thread that we have been getting at least 2 - 3 cars offers to purchase at local dealers since the week of discharge. The rates have been all over the board from 5% to 9.9% for the most part. The offers all talk about rebuilding credit after Bky etc. We were not in the market but I know other people that have gone ahead with the offers and have been happy with the outcome. Good Luck!