Dealing with an interesting car issue...

[MBTH]

We've got plenty of problems with our yet to be filed case... though ultimately it's really straight forward. I know that we qualify for a 7 and we pass the means test easily. We're also still trying to work out whether to go pro se or not. We barely have the cash to buy food at this point... the thought of retaining an attorney is not good.

Also, we suspect that at least two creditors are getting uppity and will likely try to sue us as early as next month.

Anyway, I'm not sure what to do with our car. It's 10 years old. I took out a title loan on it 2.5 years ago. I'd been making the $300+ a month payments, and at the end of August (the 2 yr mark) our payments dropped to under $80 and the interest rate, apparently, went down to under 10%.

I was never notified of the change in terms, and my statements don't indicate them, either. The statements are really vague. They only have a total amount due, a payoff amount and the current payment due.

So, I called the finance company and they told me that my loan had "matured" and to "help me out" they reduced the interest rate, which in turn reduced the minimum amount due.

In a practical sense, it is a welcome relief... but legally? It feels all kinds of wrong. I requested a copy of the new terms in writing and they refused to give it to me... said it was an "internal revision" and there is no paperwork. The only thing I've got are the statements that show the minimum due went way down. It just screams finance law violations... at least I think it does. They changed the terms of the loan without notifying me, nor getting my signature. It seems silly to complain about such a reduction... but it just feels wrong, even though the current terms are actually quite decent. But without it in writing, what's to prevent them from changing the terms again without notice? Am I subject to random amounts sue each month just because they fell like messing with me? They haven't yet. The past 5 months have all been at the reduced rate... but still... I think you know what I mean.

Interestingly, I also asked them to send me a copy of the original contract for my records. They said they would do that, but never did. We recently moved and some boxes went missing... including an entire drawer from our filing cabinet. Grrr. That's another complication I'm dealing with.

At one point, I guess I started asking too many questions because when I told them I never asked them to modify the loan and I never received any disclosure of these new terms, they said, "Well we can revert it to the old rate right now if you want," quite nastily. It was a not-so-thinly veiled threat.

At this point I feel like they're holding me hostage. I've called the state consumer protection office and they wouldn't help me unless I could provide them a copy of the new terms. Well... duh! The whole point is that they refused to give it to me!

It's like they know they're doing something illegal and they know I know it... but because the terms are WAY, WAY better now than when I signed the contract, they know I'm not going to rock the boat and risk them enforcing the terms of the original contract. If they do, we'll likely default and they'll take the car... a 10+ year old car that I know they don't want to deal with.

Now that we're looking at filing, I wonder how this might play out with them. I know they don't want our car, and frankly... we can't really lose it, either. We have another car, but it's older and in need of repairs... not even drivable right now. We would simply get rid of it... but there is an out of state title issue there. We've been waiting on a duplicate title for 8 weeks now now. They told us it could take months.

If we keep the car, how likely is it that they will enforce the original terms? Would they tell the court we owe them $300+ and not $80 a month, thus making us look like liars? If I could pay it all off right now, I would... but then... that would look bad, too. Besides... I can't afford a lawyer right now... so I certainly can't pay off the car loan. Well, actually... the car loan balance is only $1600.... so it's less than what the attorneys around here want. Either way... we don't have it. In fact... we don't even have enough to pay the filing fees at the moment, so we're really stuck, though I could could come up with that in a pinch.

I just know we need to do something because we have increasing medical bills, too... and there are a ton of other factors that necessitate our filing as soon as we can, even if it is a straight 7 with everything covered under the exemptions - at least for the time being. That could change in the next year with the administration of an estate where my husband may (or may not) end up with some property. It's an estate that has not gone to probate yet, nor will it for at least 5-6 more months, if not longer. At this point, it's unlikely he'll get it... he thinks the creditors may take it all after a sale of the property. But that's another issue all together!

On a side note: once that estate does go to probate, my husband will be able claim $5,000 on a life insurance policy immediately. Right now, though... he has no legal right to it because of dead beneficiaries. It's frustrating that the money is sitting there... the insurance company wants to give it to him, but legally it can't happen yet. He has to have a court order through probate... which we can't open yet because we have to hire an attorney to handle it... it's required by the probate court. And of course... we can't afford one yet. You think BK lawyers are pricey? Try probate lawyers! I'm telling you... our situation is so ugly. It's a bunch of stupid peripheral stuff. Our chap 7 filing will be the easiest part of it all.

[StartingOver08]

You have all the evidence you need: the statements they are sending you showing the new min due and the new balance. When you prepare your paperwork for the BK, the attorney will need to see recent statements and you have those. If you decide to go pro se, you will still need all of your documentation put together before you file, but you only submit what is required unless the Trustee asks for more.

[MBTH]

Thanks. That's what I figured... and I do have all of that.

The guy at the finance company told me that my loan essentially converted from a title loan to a "conventional auto loan" -- now whether that's really true or not, I have no idea.

But if I try to reaffirm the loan, how does that work? Will they convert to the original terms? They already threatened to do that because I was asking questions about the terms. All I know of these new terms is what I was told over the phone, plus the ridiculously vague billing statements.

Reaffirming would mean those terms would go in writing...something they really don't seem to want to do for me at this point. And, if they want the higher amount... I know we won't be able to afford it, and the court will likely deny it. I'm not even sure what would happen at that point...

It's the account we are wanting to keep in this whole mess... but we can only afford to do it at < $80 a month as it is now.

We may have an alternative... we may be able to simply sue the finance company for nit-picky finance law violations (there are several with this company) and simply settle for the balance of the loan plus attorney fees. We do have somebody working on that one for us (contingency!) ... but it's a bit of a long shot and we're not really counting on it. He's really just doing it as a favor/barter thing. Unfortunately, he's not a BK attorney and when I asked him this question he just looked at me like I was speaking a foreign language. He's a corporate law guy and he won't touch bankruptcy cases. Figures.


BTW... filling out the forms and going pro se doesn't intimidate me at all. Not much... I just know that sometimes, a lawyer just helps, even just in name. My husband spent 3 years on a disability claim that went back and forth due to a technical legal issue that kept us in an infinite nightmarish loop. He decided to hire a lawyer... and wham... it got done! The lawyer he hired knew the ALJ pretty well, and knew how to work a creative solution to the problem. It cost him a LOT in retroactive benefits (over $15K worth), but it meant that the claim was approved, and that's what really mattered.

(That 3 year wait and loss of benefits is one of the reasons we're hurting so much right now...)

Also, I know quite a few individuals who are virtual petition preparers working for attorneys. I know all of their resources and methods, and it's not difficult at all. It's just meticulous and means understanding the paperwork.

I had considered prepping all the papers myself and THEN going to an attorney, hoping it might reduce the fee. Yeah... probably not.

[StartingOver08]

One of the things you will want to get is a copy of the original agreement between you and the title loan people. I know you asked for it already, but you might want to send a letter CMRRR (Certified Mail Return Receipt Request) so you have proof of it. The Trustee does normally want access to the contracts and registrations.

As to the reaffirmation, you can try to renegotiate whatever terms works for you and have those terms put in the reaffirmation. For a place like this I would make darn sure the interest rate, the montly payment and the balance are all in writing (the reaffirmation requires it anyway) and I would add the fact that they must return the title to you promptly with X days after final payoff and whatever else you think is important. Title loan places do not have a very good reputation, so put everything in writing if you are considering a reaffirmation with them.

[MBTH]

Thanks! I had intended to send that letter next week anyway... but that's very good info.

This finance company is interesting. They do both traditional financing as well as title loans, and the guy did tell me it "converted" to a traditional loan. Again, no idea what that means, really. But, I'm obviously not paying the outrageous Title Loan rates anymore.

If we don't reaffirm... we'll lose the car. That's problematic in many ways, obviously.

It's not like we're living large... it's a 10+ year old Honda Civic. I know the finance company doesn't want it back, so that is to our advantage. I'm fairly sure they'd be willing to negotiate a new contract... I'm just not sure they want to go on court record with it because of their shadiness.

I regretted the decision to take that loan not long after doing it. I actually tired to rescind it, but they talked me out of it. Shady people... and I just want to be done with them.

I'm still confused as to why they'd drop the rate. Maybe there's some kind of law that they're actually abiding by that forces title loans to convert after 2 years? If so, though... why not give me the new terms in writing? Makes no sense.