Filing in Feb; rethinking keeping the car and have questions...

[clc08]

Husband and I will file chpt 7 in Feb. Our home will be eventually foreclosed, but we have been maintaining car payments with no late payments in order to keep our car.
After a discussion today, we are rethinking this: 1. Our payment is high at $500/mo, although interest rate is low. 2. If we keep it it will be paid off in 2 1/2 years. 3. We really no longer need this car...a loaded Accord LX. We want to get a good used CRV...we have pets to haul, etc. 4.We are concerned that if we keep our car when we do sell it, we won't get enough to pay off the loan.

He lost job and I was getting forced out of mine and took early retirement in the summer. He now has a new job which pays very poorly, but at least there will be benefits. We are grateful for that. We are obviously older and this may be our last car.

We have limited 401K and had planned to use this money for a modest home. We are hoping to relocate out of our state. I do have a wedding ring I could sell to get money to put towards buying the CRV, or whatever we can find in order not to dip in the 401 for the car.

We don't know if we would be worse off in the long run by getting rid of the car since we already have the loan and a low interest rate and it might help rebuild our credit after the BK. I don't know if that is the case, or not.

If we do let the car go, how does that work? Do we just stop paying the payments and let it get repossessed?

Right now, the car really isn't an asset, it's a wash, since what we owe is about book value.

We aren't sure of all of the ramifications of keeping the car vs. letting it go, and when and how all of that would take place.

Any of your experiences or advice on this topic or anything else that strikes you when you read this is most welcome. We want to do the most responsible, right thing. Thank you.......

[doomed]

I don't really have any advice on the car, but you will NOT get a low interest rate immediately after BK, so you may end up with a similar payment for a much longer term. And please, please, please do not dip into your 401k for a car. You said you are retired and you guys are older, you need to leave that money alone.

Hugs and good luck to you.

[tobee43]

Husband and I will file chpt 7 in Feb. Our home will be eventually foreclosed, but we have been maintaining car payments with no late payments in order to keep our car.
After a discussion today, we are rethinking this: 1. Our payment is high at $500/mo, although interest rate is low. 2. If we keep it it will be paid off in 2 1/2 years. 3. We really no longer need this car...a loaded Accord LX. We want to get a good used CRV...we have pets to haul, etc. 4.We are concerned that if we keep our car when we do sell it, we won't get enough to pay off the loan.

He lost job and I was getting forced out of mine and took early retirement in the summer. He now has a new job which pays very poorly, but at least there will be benefits. We are grateful for that. We are obviously older and this may be our last car.

We have limited 401K and had planned to use this money for a modest home. We are hoping to relocate out of our state. I do have a wedding ring I could sell to get money to put towards buying the CRV, or whatever we can find in order not to dip in the 401 for the car.

We don't know if we would be worse off in the long run by getting rid of the car since we already have the loan and a low interest rate and it might help rebuild our credit after the BK. I don't know if that is the case, or not.

If we do let the car go, how does that work? Do we just stop paying the payments and let it get repossessed?

Right now, the car really isn't an asset, it's a wash, since what we owe is about book value.

We aren't sure of all of the ramifications of keeping the car vs. letting it go, and when and how all of that would take place.

Any of your experiences or advice on this topic or anything else that strikes you when you read this is most welcome. We want to do the most responsible, right thing. Thank you.......

clc...glad you got your post up!!!!

i'm with doomed on this one, unless you really have the "extra" in your 401k.

we had two cars...and surrendered the "newer" with the payment...and kept the older car which was paid in full...a small suv..

.like you, we were a bit "older"...however, we both understand the importance of a "good" reliable car. we were lucky that the "older" pd off car, was still in good shape and low mileage. we also, like you, wanted to get rid of the payment, which for us was $400 monthly......PLUS insurance costs, etc.

my thoughts are tho, it is still got value and is a low interest loan, it may be worth keeping it, at least until after your bk is over...also, the auto financing co. may ask you to reaffirm the loan, at which point you'd really have to decide on what to do.

we were...or i was really dumb and used our 401 to keep up with the credit cards due to heavy guilt...if i had to do it over for it...i would never have cashed it, since the 401 was exempt and i can see your point on maybe using some of that money after the bk to buy a reliable "used" car....but the ultimate decision needs to be; you need to do what is BEST for you....

[clc08]

Doomed (gosh, I hope not) and Tobee, thanks for responding....He has an old truck paid off, but with questionable reliability...that can not be our main means of transportation. Tobee, when you said the car loan people could ask us to reaffirm the loan you lost me. That's how ignorant I am. Does that mean if we quit paying the payment the loan company could demand we keep the loan?

We could continue to keep the car through the bankruptcy, and maintain the loan payments. Husband worried that if we did that, when we do sell it we won't get enough back to cover the loan amount.

[tobee43]

Doomed (gosh, I hope not) and Tobee, thanks for responding....He has an old truck paid off, but with questionable reliability...that can not be our main means of transportation. Tobee, when you said the car loan people could ask us to reaffirm the loan you lost me. That's how ignorant I am. Does that mean if we quit paying the payment the loan company could demand we keep the loan?

We could continue to keep the car through the bankruptcy, and maintain the loan payments. Husband worried that if we did that, when we do sell it we won't get enough back to cover the loan amount.

ahhhhhh not ignorant....it's not everyday one files bk... we all started at the beginning of our journey's with just want we had in the palm of our hand.

the reaffirmation is that of an auto loan...which, if you do decide to keep the car in the bk...many of the car loan companies and or banks ask one to sign a contract reaffirming you will pay off the loan. you then become liable even after the bk if you decide to stop making payments. we were never in that situation, however, from what i have read on this forum many of the banks and car fin. co. do require you to reaffirm.

keeping that in mind, if you after the bk decide to give up the car for whatever reason you will have to also maintain responsibility for the loan...so if that's not what you are wanting to do, or if your husband doesn't feel as though you will get the money back to cover the loan, you may be best off to surrender the car, much like we did. we have no regrets really at all.

[debee]

Another option, perhaps the most popular one, is called "retain and pay". You stay current on your payments and don't sign a reaffirmation agreement which, as tobee explained, would put you back on the hook for the loan. Ford Motor Credit, and the credit unions usually require you to reaffirm. But not always. You could contact your lender's bankruptcy department and just ask them anonymously (don't call from home if you want anonymity because your phone number is probably set up to link to your account) if they require reaffirmations on auto loans. If they don't, and you decided you want to keep the car for awhile, just remain current with payment. You would be able to stop making payments on it at anytime after discharge and you would never be held liable for the debt. The loan would be discharged with your bankruptcy.

The lien would remain until the car was paid off (and if it's a credit union, there may be other issues), so if you stopped making payments, although the lender would not be able to pursue you for any money, they would be able to come get the car. No need to sell it. Just stop paying and they'll come pick it up.