WWYD? Qs about what to do with my car.

[debtsucks]

I have a 2006 Ford Freestyle that is worth about 12,000 (Kelly Blue Book) and we owe about 21,000, our payments are 554 a month. Our lawyer told us we can either claim it in our chapter 7 or do the 722 redemption and our payments would probably drop to about 380 a month at a 23% interest rate for the 12,000. We are not filing until this February, we are working on paying off the lawyer. So my questions are.

1. Should we try to get a cheaper car financed before we file, and stop paying on this car and let it go to repo?

OR

2. Hold out for the 722 redemption and either refinance it that way or get a different car through them?

Also, my husband has a little Pontiac Fiero. I hate the damn thing because you can not see him in it while on the road, it just isn't safe. Anyways I want him to get rid of it before we file and get a four door, something that the whole family can fit in. Would it be okay to get rid of this before we file? I think the car is only worth about 900.
Thanks!!!!

[StartingOver08]

Where are you located (what state)?

What are your auto exemptions? Do you have a wild card?

I don't have enough information to give you the answer to your WWYD question. BUT, I would probably surrender the 2006 Ford in the BK so a repo doesn't show on your credit before you file. A repo (voluntary or not voluntary) reports if you don't surrender it IN the BK. You are too far upside down on this vehicle to keep it. Stop making the $554/mth pmt once you file and are in the automatic stay. You may want to time your surrender to just after your 341 and before your discharge if you need the payment to qualify for a Ch 7. You could start your BK intending to reaffirm and then change your mind after the 341 and refile your Statement of Intentions to surrender.

Then after you are discharged, sell the Fiero and get whatever $$ you can get for it. Take all those extra payments you saved from not paying the Ford and use that as a down payment on something AFTER your DISCHARGE. Buy something used, and cheap. JMHO

I did that with my BK. Surrendered the one with the $651/mth pmt and reaffirmed one with a small payment (that I negotiated to a smaller amount). Now both vehicles are paid in full less than a year after my discharge. It feels good not to have any vehicle payment at all.

[debtsucks]

Sorry I always forget to say what state I am in. I am in Illinois, and if I remember correctly it is 1,200 for vehicle and 2,000 wildcard. I really hate the thought of a car payment especially since Bk is about starting fresh, so I might as well surrender it and save the 554 and buy something with cash. So this is my other thought, would it be ok to just get rid of the fiero now before we file and get something that will fit all of us (family of 5) and stay within that auto exemption? His car is a 2 seater. Thanks

[StartingOver08]

As long as you are within the exemption amount you are safe to get something before you file.

I looked up the exemptions for Illinois here: http://www.legalconsumer.com/bankrup...et%2C+IL-IN-WI

Looks like your auto exemption is mixed in with some personal property exemption (see the link above) for a total of $2400 plus your wildcard is $4000. If you both are filing, then you can double these exemptions. Take a look at the link for details.

The only reason I thought of getting one after your 341 is you could not only have the proceeds from the sale but potentially a couple of the $554 payments you are not making saved to get something a little bit more than the exemption amount (if you need it). You are allowed to start saving once you pass your filing date. The amount of cash on hand is important ON the filing date so you really can't save much before you file. Check your exemptions for the amount of cash you are allowed to have on the filing date.

It sounds like you have a good plan for your vehicles already. Just make sure you run it by your attorney so he can tell you what the Trustee's in your district usually do.

[debtsucks]

Thanks, I wonder if the site I found my info is old or just not accurate. I really appreciate the link.