Filing Ch 7 on my own - question regarding reaffirming car loan

[michelle1181]

Hi all -- I have been going back and forth over whether or not I should hire an attorney or file my petition on my own...and I am at my wits end =(

Here is my issue - I just got a new (used) car, previously didn't have one before and was relying on public transportation to get to work, however due to the fact that I have a 4 year old son and commute far, it was essential for me to get a car. I was able to get approved through roadloans for a loan for 10,500 with $1,875 down payment. I was able to withdraw the money for the downpayment through my 401k and now I am the owner of a 2006 Nissan Sentra with only 32k miles and what a relief!!

The loan itself is not very favorable, 24.99% interest rate, so basically the car is worth $11k and the loan is $20k. I was planning on refinancing in a year and am 100% sure I will be current on all payments. Given all this info and the fact that I need this car to get to work and make money, etc, will the judge allow me to reaffirm or keep? Or will he/she decide that the interest rate is too high on the loan and deny the reaffirmation? I just really don't want to lose my car.

Any help or advice is greatly appreciated. Thank you.

[justbroke]

I thought that I responded to this in another thread. In any event, 24% is a high interest rate and I'm unaware of ANY Judge that would approve a reaffirmation. However, you may have the option to "ride through" by remaining current on the loan. Roadloans/Santander is actually not that bad.

Since this rate is very high, you may want to start the process for a Redemption loan through 722 Redemption/USBank. I would do this ONLY to compare the rates. If USBank can do 16% or so, then it's a no-brainer.

Also, I don't understand how you write in one paragraph that the loan was $10K with a $1.8K down payment, but later write that the loan is basically $20K???

[IamOld]

Just broke - what is a 722/redemption loan???

[stratos]

I'm not recommending this - just asking... Would it make any sense to do a Ch 13 in a situation like this, to get the interest down to the Till rate? Of course, that would mean atty and trustee fees, so maybe not worth it?

I'm also confused about the actual amount of the loan. How did it get to be $20k? Maybe she means it will end up at $20 over the loan term.

[justbroke]

Just broke - what is a 722/redemption loan???

It's a loan offered by just two banks that I know of (USBank is one of them). Under 11 USC 722, the section of the bankruptcy code that allows "redemptions", you can redeem the property for its current market value (retail value).

So, if the car is really worth only $11K (retail), then you can redeem it for retail. You would need to file a Motion to Redeem and provide exhibits that show the (retail) value of the vehicle and ask the Judge to set that price. You also need to get financing in place, preferably before filing. This needs to be done before discharge.

I redeemed a car and save $3K from what I owed at the time of conversion to Chapter 7!

[IamOld]

It's a loan offered by just two banks that I know of (USBank is one of them). Under 11 USC 722, the section of the bankruptcy code that allows "redemptions", you can redeem the property for its current market value (retail value).

So, if the car is really worth only $11K (retail), then you can redeem it for retail. You would need to file a Motion to Redeem and provide exhibits that show the (retail) value of the vehicle and ask the Judge to set that price. You also need to get financing in place, preferably before filing. This needs to be done before discharge.

I redeemed a car and save $3K from what I owed at the time of conversion to Chapter 7!

Thanks very much!!!!!!!!!!!

[justbroke]

USBank operates a lending operation known as 722 Redemption. I would be on the phone with 722 Redemption today, to find out if you qualify and what rate you could expect.