Question Auto Loan-Any luck while in chapter 7 before discharge?

[thyrazure]

Hi guys,
My creditor meeting is on the 28th of the month, and we plan to not re-affirm our auto loan, what has been your experience for the timeline on when they repair the vehicle, is it possible to obtain an auto loan prior to discharge? we need something to get us around and can't buy a beater or borrow a family members car..?
I've been getting lots of mail from local dealers offering second chance loans....should I go local?
Marina

[ccmisery]

I am going to be reaffirming two cars, one is leased the other is financed so it's not really 2 for 2 but I will assume the lease till it ends.

If your car is not worth reaffirming, then it makes sense, but if you have to finance a car at an insane interest rate you might want to think twice about not reaffirming it. The only reason I am is because I got a decent APR on my one financed car I bought a couple of months ago on bad credit. Some people have success after discharge but that can be 60+ days or more and others I have read are not successful in getting decent loans or loans period.

[LadyInTheRed]

It is possible that if you keep paying on the current loans, they won't repossess. Have you asked the lender about their policy? Even if it is not worth paying until the loan is paid off, you could continue to pay until you are able to buy a beater or qualify for decent loan terms.

I doubt you will be able to get a loan before discharge. Even if you can, terms will probably be better after discharge. If they lend to you now, they risk you not getting your discharge and having to default on the new loan and/or waiting a few months and filing BK again. If they lend to you after your BK, they know you can't get another Chap 7 discharge for 8 years.

[bcohen]

Sure, you can get an auto loan before discharge. Starting literally 3 days after I filed for Chapter 7, my mailbox has been overflowing with offers from car dealers--and I'm not talking about shady "buy here, pay here" places--offering to finance a new, or late-model used car. These offers all say in big, bold print that financing is available even with an open bankruptcy, and go on to say that it is a good idea to "surrender your current vehicle" and buy another one "to help rebuild your credit". While I disagree with that advice, the point is that you do not have to wait until after discharge.

I've gotten offers from Chevy dealers, Ford dealers, Kia dealers, Hyundai dealers, Nissan dealers, and even a Toyota dealer. I have no idea what the interest rates or other terms are, however.

[ccmisery]

I doubt it's common to get 0 to 3% APR after discharge.

Keep in mind Ford Credit requires reaffirmation of loans or assuming leases, after filing they will be notified and will send you a letter notifying you to do this or prepare to surrender the vehicles. You can sign it and then give it to you lawyer and make sure they file it with the trustee and court, then you have 60 days after the signing date to change your mind.

[bcohen]

I doubt it's common to get 0 to 3% APR after discharge.

Keep in mind Ford Credit requires reaffirmation of loans or assuming leases, after filing they will be notified and will send you a letter notifying you to do this or prepare to surrender the vehicles. You can sign it and then give it to you lawyer and make sure they file it with the trustee and court, then you have 60 days after the signing date to change your mind.

Or, if you have a loan with Ford Credit, and the car is worth less than you owe, you could stop paying and file for BK exactly 2 weeks after the first missed payment was due (they won't repo until at least 30 days late) and then the automatic stay will protect you. Using this strategy, you could drive the car payment-free for at least 3 to 4 months, and use the money you are not paying on your car loan to save toward another car. That is what I would do. I would NOT let myself be bullied into reaffirming, when it is clearly NOT in my interest to do so!

[ccmisery]

Or, if you have a loan with Ford Credit, and the car is worth less than you owe, you could stop paying and file for BK exactly 2 weeks after the first missed payment was due (they won't repo until at least 30 days late) and then the automatic stay will protect you. Using this strategy, you could drive the car payment-free for at least 3 to 4 months, and use the money you are not paying on your car loan to save toward another car. That is what I would do. I would NOT let myself be bullied into reaffirming, when it is clearly NOT in my interest to do so!

I am not going to do that, they did me a favor giving me a car at 9.99% APR which isn't great but it's better than I expected with a crappy FICO score and I was turned down by most everyone else. If I get a job and can pay it, I will continue to be on time.

Besides what good would the money do that you saved not making payments for 3-4 months if you cannot get financing, might be able to buy a Motorcycle or Scooter but a new car doubtful. I am also not in a guaranteed 7, I might get converted to a 13 if I have a job during my 341 which would place me in a bad situation for reliable transportation.

[thyrazure]

update + 1 question

so legally they can repossess any time after the creditors meeting? How long is the stay? Can I keep it until discharge? That way once its discharged i have more banks I can work with?
not reaffirming it is worth 3k financed at 14k.
I've been paying on it since 2005....cant bear to add up all the money i've handed them!

[basketsbears]

We surrendered one car, and one we have kept paying on. Originally we signed to reaffirm, but then decided to rescind that. Both were with Ally. They told me when we rescinded it is very unlikely they would repossess unless one falls behind.