Need opinions on upside down car.............

[my4devils]

Well the car isnt upside down- but the loan sure is.

A little background info- my husband and I will be filing Chapter 7 sometime late Feb/early March. We retained an attny last night. We have a 2003 Town and Country that we still owe about 13k on. We are current with payments. The thing now has about 85k miles and it and a nice dent in the center panel from when a deer ran into me. We might get about 7k or so on a trade in. I did a search for similar things in the forum- but we still cant seem to figure out what to do with it, I think I am more confused than ever. Our attorney thinks we should keep up our payments- which we can do easily since we are no longer paying our cc's and medical bills. Then we can do a ride through and decide later if we want to turn the car in. I am thinking this would be a great time to shake off all the negative equity! That being said- I have 4 kids and I do need a van or something else larger to transport a large family and I am not sure of what direction to go in order to get a replacement vehicle. My husband has a car through work- a Jeep Cherokee- which I cannot drive and the whole family cant fit in either. If anyone has any thoughts, ideas, suggestions, etc... I would greatly appreciate it!! We appear to be a pretty clear cut, no asset, Chap 7 and this is the only issue so far. Thanks!

[cj0203]

We are discharging a car in our BK in a few months that is broken but we still owe on. We've already purchased a car to replace it (it was not a new car, it's a 2000 Explorer for $6K). We stopped paying on the broken one and are paying on the new one instead.

Our lawyer told us it was fine. We just had to have a good reason for not paying on the old car anymore. Our reason: We owe $4k, car is worth $5k. Cost to fix: $6500. So we'd owe MORE than double what it's worth if we kept it and fixed it (because we'd have to take a loan, we don't have $6500, and we've already put over $3k into it since May - all on CCs that are being discharged).

I'm not sure about your specific situation, but wanted to share mine. Hopefully someone has more info for you.

[325Falcon]

Why keep any bad debt though a BK?

[LifeNLemons]

You can keep the car, keep the payments up, and not reaffirm/redeem. But they will come after the car with one missed payment. Plus side, they can't hold you responsible for the loan, and you could just turn it in whenever, no penalties. (As I understand it....make sure you ask your lawyer)

Reaffirm the loan, only ask for better terms. After Wells Fargo told me they wouldn't do anything for me, they sent me a letter detailing a reaffirmation agreement dropping 10K of neg. equity, lowering the interest rate 7.65% and keeping the length of the loan barely changed from the original. They payment was nearly 1/2 of the original. I would have signed that agreement and kept my car, but.........

I bought a 2006 Dodge Caravan through a redemption loan. Not the best interest rate, but I deal with US Bank, not a buy here, pay here. I have a lower payment than I started out with, I bought the car wholesale (so I'm not upside down-yet! ), and my interest rate with improve with on time payments. You can only get the loan after you file BK, but you can find out what they'll do for you before you file.

So you do have some options. Personally, even without CC payments and the like, I'd go for a lower payment. You don't want to find yourself in the same situation that brought you to this point, KWIM?

[funEface]

We signed intention of reaffirmation with our lawyer and that was filed with the court. Well our lien holder never sent reaffirmation paperwork so our loans were NOT reaffirmed. DH just decided to downsize to a car from his truck. So he got approved for a blank check through Capital One. Not too bad of terms (better than 722 Redemption ones I see listed) and we got to go wherever we wanted to find the car we wanted. I was glad we originally intended on reaffirming. It gave us time to shop around while we still had the other vehicle. No pressure to rush into any thing. Now we just called up the lender for the original car and said we'll be surrendering. So they'll be out in a week or two to pick it up

[my4devils]

Thank you everyone for your advice. Husband and I talked it over last night and as soon as we are discharged we will start looking for something used to hold us over for a year or two while we let the van go. If we kept it, by the time we paid it off it wouldnt be worth a darn thing and probably not drivable either. We were concerned about having to finance a small amount but even if we have to suffer with a higher interest rate for a while we will still be better off! Thanks again!