Will I have to pay negative equity?

[codingirl79]

I have a 2018 Dodge Charger. I love this vehicle... However, it costs $747 a month. I have to surrender I am two months behind on payments. There is a-lot of negative equity. If this goes to auction, will I have to pay the remainder of the equity? I cannot afford to do this. We are in chapter 13 bankruptcy in PA. Cramdown is not an option as it is newer. I am tremendously stressed from everything. I can't even function because of my worry. It takes everything from me.

[justbroke]

You can include it in your Chapter 13 Bankruptcy. The lender can file a claim in the bankruptcy for the so-called deficiency amount. The deficiency amount is the difference between your loan balance and the price at which the vehicle sells. Your Chapter 13 will pay this as an "unsecured" claim meaning that it may or may not be paid... or just a portion will be paid. The debt would be both dischargeable and discharged.

You should see if you can get a new car before filing that has a better payment. It may be tough to do so because most lenders will be looking at that $747/month as debt payments and it will likely affect your DTI (debt to income ratio).

[codingirl79]

Thank you, We have two other reliable vehicles. Yes the DTI for us is horrible.

[JLM0706]

You can include it in your Chapter 13 Bankruptcy. The lender can file a claim in the bankruptcy for the so-called deficiency amount. The deficiency amount is the difference between your loan balance and the price at which the vehicle sells. Your Chapter 13 will pay this as an "unsecured" claim meaning that it may or may not be paid... or just a portion will be paid. The debt would be both dischargeable and discharged.

You should see if you can get a new car before filing that has a better payment. It may be tough to do so because most lenders will be looking at that $747/month as debt payments and it will likely affect your DTI (debt to income ratio).

YES- I am struggling with that issue. I pay $625/month with a lot of neg equity. BUT, I cannot find anyone willing to loan me money.

[justbroke]

YES- I am struggling with that issue. I pay $625/month with a lot of neg equity. BUT, I cannot find anyone willing to loan me money.

If going the Chapter 7 route, there's a company called 722 Redemption Funding (a US Bank company). They gave me a loan to payoff my car at the "cramdown" price. It's not available in Chapter 13s.

If you are in Chapter 13, or will be, andhyour car has been refinanced (at least once) or it has been 2.5 years since purchase, you can cram down the vehicle in the Chapter 13.

[JLM0706]

If going the Chapter 7 route, there's a company called 722 Redemption Funding (a US Bank company). They gave me a loan to payoff my car at the "cramdown" price. It's not available in Chapter 13s.

If you are in Chapter 13, or will be, andhyour car has been refinanced (at least once) or it has been 2.5 years since purchase, you can cram down the vehicle in the Chapter 13.

Oh, nice! My attorney did mention "cram-down", I wasn't sure what that meant. He is trying to get me into a 7; I should know this week. I am trying to save up the remainder of his fees to get this thing filed. Either way, I need the relief before everyone starts suing me.

[codingirl79]

Cramdown and 722 redemption are not an option for me. Yes, file so you can at least save yourself.

[codingirl79]

Do you know if the difference that the car sells and the balance is considered taxable or is this amount also secured in the bankruptcy?

[justbroke]

Do you know if the difference that the car sells and the balance is considered taxable or is this amount also secured in the bankruptcy?

It's not taxable because you were bankruptcy and it was discharged. If you do receive a 1099-C (I think it's that)... forgiveness of debt form... then you will just need to file Form 982 and select that you were in bankruptcy (Title 11). If you do get that 1099 form, I suggest speaking with your tax preparer about filing that special form.

[codingirl79]

Thank you, I did see the information about form 982 and that is very good to know.