Car purchasing questions--scared

[Martha13]

[Martha13]

Now I'm really scared....no ideas? Am I the only one in this particular situation? Is this question too far out there to answer?

[Flamingo]

I am going to answer you from a Chapter 13 perspective. Since your cars are only one year old, I would suggest keeping them and having them crammed into the Chapter 13 Plan. When that occurs, the attorney takes the Blue Book or similar value of the vehicle, eliminates all or most of the interest and spreads it out over the course of the plan (36 to 60 months) and it is paid in your Plan payment. You will need newer vehicles as they are to get through at least a 36 month plan or longer. Right now your loans on these vehicles are probably way more than the vehicles are worth. Letting them go or trying to trade them in will leave you stuck with the difference.

[qwertysue]

To cram, you must have had them at least 910 days.

The Bankruptcy Code treats vehicle loan claims differently, depending on how long ago you purchased your vehicle. Specifically, if you purchased your vehicle less than 910 days ago, you will end up paying the full balance due, with interest, in your Chapter 13. If you purchased your vehicle more than 910 days from the date of filing, you may be able to “cram down” the claim to equal the fair market value of the vehicle and you may also be able to reduce the interest rate.

[Martha13]

Thank you Flamingo and Qwertsue for your replies! I will have a better idea after Friday's appt which way we'll be filing (7 or 13) but the car issue is driving me nuts. Both cars are well under the 910 day rule, so I'm not sure what to do. One car is holding its value well (mine, a Toyota) so I thought maybe I could even try to trade it in for a cheaper car in the meantime-before filing--but my husband's car has lost a great amount of value, where trading it in would tack on almost $12-$15k, which wouldn't help a bit. That's why I was wondering if it would be best to try to get cheaper cars while we still have a glimmer of good credit *sigh* then let the others go. Would we still be responsible for them if we "returned" them in the bk? Does it matter if it's a 7 or 13? Thanks again for everyone on this board...it's the first thing I want to read in the morning now!

[zimbra]

Martha,

I returned a less than year old car in my Chapter 7 with no problems (in fact they are finally coming to get it today). The payments were just to much added to the fact that I am going through a divorce also and didn't want or need this hindering my fresh start. I did wait until after discharge to buy my new to me vehicle. Yes, I was extremely backwards in the vehicle.

I think it is really a matter of what feels right and works for your situation, your attorney should be able to tell you what you need to do and what your options are.