I have no idea what to do...

[Rozi]

Hello!

This is my first time posting in this forum but I have enjoyed reading what I have so far. Well here is my question. I have a 2004 Toyota 4Runner that I owe 26K on. I found out that the car is only worth 9k now. My parents are 598.00 a month and I can no longer afford it. I am currently financed through Citifinancial Auto and they are harassing me all the time. I am not even 30 days late more like 5 days and they are calling day and night. So I don't know what to do. Should I file Chapter 13 bankruptcy protection? Should I try and sell the car and offer an settlement? I thought about buying a cheaper beater car and letting the Toyota go to repo. Please help I don't know what to do! I filed Chapter 7 back in 2001 and it's about to fall off my credit report next year. I also want to buy a house with my boyfriend too next year. I also have about 12k in other debt but that is manageable It's the car that is killing me. Any help would be appreciated!

[AlmostAmos]

If you let the car get repo'd (vol or invol), you'll be liable for the deficiency. You'll still have Citi (or a collection agency) coming after you. You could get rid of it in a Ch 7/13 along with your other debt. If you do this, you WILL NOT be buying a house next year - at least in your name... Paying 600/mo on a 2004 is NOT smart. I would 1) get a new car right now 2) stop paying for the 2004 3) voluntarily turn it in 4) see if they come after you and decide about the BK later.

[JoJoCal19]

First things first I would take a long hard look at how you ended up with a 2004 vehicle that you still owe $26k on when you can actually purchase new ones for that much. Whatever you did, make sure to not do that again. With a car that old and owing that much you are way too upside down to be able to do much and really the vehicle isnt worth it.

Normally the best option would be to see if they will let you go sell the car and then turn the difference into a personal loan. Some banks do that. It will not be an option being that upside down. The next best option is to pick up a cheap car, turn the 4Runner in and then try to settle out the difference.

If thats not an option you could just let the deficiency balance go and ride out the storm. Try to hide until the statute of limitations is over and hope they dont try to get a judgement for the balance. You'll definitely need a new phone number ;)

If you do file bankruptcy it would be better to do a 7 that way you can get rid of the debt entirely. If you do file BK then you have to wait 2 years before you can get an FHA homeloan.

[catleg]

I imagine that what happened here is, you were upside down on a previous car loan, and the creditor rolled that over into the new loan making you even more upside down on this car as it depreciates.

Chapter 13 could help you, as long as you've had this car for more than 2 1/2 years you can cram down the loan balance to the actual value of the car.

Chapter 7 would allow you to just let go of the car entirely.

In the absence of either of those 2 Citifinancial will keep trying to collect.

As far as buying a house, I understand the new FHA guideline is to have any bankruptcy 2 years in the past.

So without thinking too hard I think you'd either want to file chapter 7 now and get rid of the beast, or else keep paying the car until you get the house and then file either chapter 7 or 13.

A lot would depend on what assets you have to protect, as well as how deep your boyfriend wants to get into this.

Personally, I see a double dip in housing starting to happen, so I would be in no rush to buy a house, and would just take the fresh start with a chapter 7 and wait the 2 years.

Not to mention that you'll be better off income wise with the car payment gone when you go for a mortgage.

Give it 2 1/2 years, they'll be dreaming up another tax credit to buy houses. Now is a good time to clean financial house.

[StartingOver08]

catleg has a very good point! Clean up your current financial life before you attempt to buy anything else.

Did your parents co-sign on the car loan? If so, then if you file BK you will be discharged but Citi will go after your parents for the deficiency. If that is the case you need to take a hard look at how you are going to handle this debt. Shifting the burden to your parents doesn't get rid of the problem. If they did not co-sign, then filing does get rid of the immediate issue.

[Rozi]

Thank You

Thank you sooo much for the responses! My parents are not on the loan with me. It's just me! I think the reason why the car is so high is fact that I refinanced the loan with Citi 6 months after I brought the car. Because my car payment was 642 and it brought it down to 598. Then I have been late with my car payments and Citi told me they still charge interest whether or not they get my payment in. It's just a mess! I never want to do this again!

[SMinGA]

I agree that deciding on BK now might not be best.

First step, figure out what you want to achieve. Do you want to keep the vehicle? If so ch. 13 could be an option, but you'd be taking on atty fees, filing fees, and the trustee gets a cut of what you pay in.

Letting the vehicle go entirely, finding less expensive transportation - that is likely the best idea. Deal with the deficiency balance when you have to.