Notice of Right to Cure Default letter received for car loan

[Kristy12]

I just received my notice of right to cure default letter from my credit union for my car loan. I have retained my attorney, but have not filed yet. I haven't made any payments on my car loan since May. What is my next step in regards to this letter? My attorney has said the credit union might work with me in redeeming this car for the current blue book value. I will call my attorney tomorrow to tell him about the letter. What should be my next step? Should I ask my attorney to call the credit union for me, and to try to redeem the car before we file chapter 7? I hope to get all my paperwork together to file in August. I'm afraid now that the credit union will try to repossess the car before my bankruptcy is filed. The car is a 2003, worth about $3,000. I live in Iowa and plan to file chapter 7.

[stevie2012]

I work for one of the big banks and I actually do the "right to cure" letters and repossessions. If you have not yet filed, you would have to pay the total on the RTC letter by the date; otherwise, the bank can move forward with the repossession. Those RTCs are per your state law. Once they expire, the car is fair game for the car to be repossessed. Your best bet is to file prior to the RTC expiring.

[stevie2012]

And with regard to what your attorney said, we would never "settle" for fair book value once the car is repossessed. If you wish to redeem, you would have to pay the total past due, repossession and storage fees, as well as the next payment. Some states require that you pay the CAR OFF plus all applicable repo fees.

The only time a settlement is usually considered is if the account has charged off or if you have a hardship during the course of the loan and have the ability to pay a large lump sum payment (about 85-90% of the pay off). Typically, people filing BK aren't in that position.

Hope this helps.

[LadyInTheRed]

Redemption occurs after the BK is filed. It's not the same as a settlement. The creditor must accept a payoff at market value. If the creditor and debtor can't agree on the market value, the judge decides.