Non- reaffirmed vehicles question

[LostOne0069]

I have a boat that I did not and will not reaffirm. I am, however, paying the payments on it still and am not behind on it.

My thought process was to keep from having a reposession on my credit report and sell the boat, pay the loan off.

My question is: Is this valid thinking? Does it give me any benefit to keep the payments up and sell it myself rather than just give it back?

My current credit scores are all 575... and I want to buy a house as soon as possible after discharge, which requires a score of at least 580... Thus I want to keep from hitting my report with anything else that might damage it... I'm hoping that the scores will jump a bit after discharge.

FYI: The boat loan already shows as "included in bankruptcy" on all 3 credit reports (as does all but one or two of my other debts that will be discharged next month)

Thanks!

[HHM]

For the most part, that is a valid thought process. But you will have to wait for discharge before you can do so.

As for buying a house as soon as possible after BK, I would rethink that. Even if you could get financed, you will be sub-prime for a minimum of two years from discharge. Any deal you get will be horrible, and I doubt you will be able to a get a 100% LTV loan. Many sub-prime lenders and guarantors have recently imploded, so many lenders are tightening up their requirements. Also, even if you think you will want to refi later, that usually ends up costing you more money unless you wait at least 5 years and can drop your interest rate by 2 percent.

[LostOne0069]

Anyone know for sure if it'll hit my credit again... even though the account already is listed as "included in bankruptcy"?

I just don't want to hang onto it and go to all the trouble and expense of selling it myself if I can just hand it back. It'll end up costing me about $1000 to hang onto until I can sell it myself.... and while I can do that... I'd rather not if I can help it.

HHM, as for the house... well, we see things a bit differently.

First, there are a couple of people on here who have been financed right out of bankruptcy with not great rates, but not massively horrible either. Secondly, your comments about the refi are a little mixed up. "5 years and 2 points" is a really good rule of thumb for a normal mortgage... but in the case of bankruptcy... if we got a "sub prime" loan that was say, 2 percent higher than it would normally be... Well, after 6 months or a year, our credit would have probably improved enough for us to GET a considerably better rate. And besides, getting a good rate is NOT the reason to buy a home. We like owning a home, we have 4 kids and HATE renting. I'm a woodworker by hobby and enjoy modifying/improving the homes I live in. In a flat market, the house we last owned we increased the value by 31%. The other comparables in our neighborhood that we could find for comparisons only went up about 6% in that same time. We would plan on buying a home where we could do something similar... not necessaraly a "fixer-upper" but one that we can use what skills I have to improve it's value.

[HHM]

Anyone know for sure if it'll hit my credit again... even though the account already is listed as "included in bankruptcy"?

I just don't want to hang onto it and go to all the trouble and expense of selling it myself if I can just hand it back. It'll end up costing me about $1000 to hang onto until I can sell it myself.... and while I can do that... I'd rather not if I can help it.

HHM, as for the house... well, we see things a bit differently.

First, there are a couple of people on here who have been financed right out of bankruptcy with not great rates, but not massively horrible either. Secondly, your comments about the refi are a little mixed up. "5 years and 2 points" is a really good rule of thumb for a normal mortgage... but in the case of bankruptcy... if we got a "sub prime" loan that was say, 2 percent higher than it would normally be... Well, after 6 months or a year, our credit would have probably improved enough for us to GET a considerably better rate. And besides, getting a good rate is NOT the reason to buy a home. We like owning a home, we have 4 kids and HATE renting. I'm a woodworker by hobby and enjoy modifying/improving the homes I live in. In a flat market, the house we last owned we increased the value by 31%. The other comparables in our neighborhood that we could find for comparisons only went up about 6% in that same time. We would plan on buying a home where we could do something similar... not necessaraly a "fixer-upper" but one that we can use what skills I have to improve it's value.

And yet, you are now renting and filing BK...hmmmmm???

As for the boat, it's hard to say what exactly will get reported...with houses, even if you surrender the house in BK, it will still come-up as foreclosure. I don't think the same thing is true for vehicles. On your statement of intentions, did you indicate "surrender" with regard to the boat. In any event, if you have no intent to keep it, your best shot of getting rid of it, and not having it affect your credit any worst than saying IIB, (short of selling it yourself and paying off the note) would be to surrender the boat as part of the BK process.

Is the boat worth more, or less, than what is owed?

[LostOne0069]

And yet, you are now renting and filing BK...hmmmmm???

Yep, but you don't know the whole story, so don't be too quick to judge. I was only trying to say that "one size fits all" doesn't really work when you're talking about the particulars of buying a house. I do appreciate the advice though... you never know when someone is going to point out something "obvious" that you never thought of before. I am always willing to listen to advice... as long as the person giving it doesn't get bothered if I don't follow it.

As for the boat, it's hard to say what exactly will get reported...with houses, even if you surrender the house in BK, it will still come-up as foreclosure. I don't think the same thing is true for vehicles. On your statement of intentions, did you indicate "surrender" with regard to the boat. In any event, if you have no intent to keep it, your best shot of getting rid of it, and not having it affect your credit any worst than saying IIB, (short of selling it yourself and paying off the note) would be to surrender the boat as part of the BK process.

Is the boat worth more, or less, than what is owed?

We did list the boat as "to be surrenderd" but we then talked to the bank and made arrangements to keep paying the payments and keep posession of it. The boat is worth about what we owe on it... perhaps a little bit more, but not much.

Thanks again for the comments/suggestions!