Car questions

[MizErin]

Sooo... after paying my lawyer monthly payments for 6 or 7 months, I finally am paid up and ready to file!! I am starting to feel so FREE!!

Prior to this meeting, I had decided that I was going to keep both of my vehicles since my family needs both to get to work. Well, my lawyer INSISTS that I give up my vehicle due to high monthly payment and the fact that it's worth $20K and I owe $37K!! She says that she isn't planning on re-affirming my vehicle (just my other one that's financed through a credit union so it's safe) but I can still make payments to keep it, it just won't be counted on my credit. Now, I feel that I need my car payment to help rebuild my credit! It's the only 2 things that I'm current on!!

Thoughts?! Should I give up my Explorer and try and find something else? I really don't want to... my lawyer even gave me a guy's card that helps with getting you into a car while going through bankruptcy or post discharge.

[LadyInTheRed]

Your attorney is giving you good advice by saying not to reaffirm a vehicle that is that far underwater. She obviously is not willing to sign the required attorney declaration saying it would not be a hardship. The decision of whether to keep paying on the current car or buy a new one should be based on the finances, not whether the loan will be reported on your credit report. Stop thinking about what you want and insteawd think of what you need. Is a $37K vehicle loan really necessary? What's the current interest rate vs. the rate you would get on another car? What will the total cost of the vehicle be after paying off the loan? Those are the things you should be asking right now.

[MizErin]

Thanks for the response. It's hard for me to take out the effect things will have on my credit.. it's been engraved in me to keep it the best it can be. Even though I was barely keeping my head above water with my debt, I paid everything on time. I think it wouldn't hurt to go look at what offer I can get. Is my $37,000 vehicle necessary? Well, long story short, there are multiple vehicles rolled up into this one because of my past (which is changing with this BK). A $26K car turned into a $50K car in the beginning of the loan. I do require a 3rd row seating vehicle, which are generally more expensive, but no, the vehicle I currently have now is not necessary. If a new/used car is going to cost me less than $700 a month, I think I will be all for giving up my current vehicle and getting another, which will report on my credit.

[bcohen]

Right now, the market is flooded with private-party used minivans from 1998-2004 for less than $2000 in good running condition. In fact, on the local Craigslist here, someone is selling a 1998 Caravan in immaculate condition with about 80,000 miles for $2000 or best offer.

It sounds like you would be better off to stop paying on the $37000 car loan and time the bankruptcy filing so that you file within a week or two of when the missed payment was due, so the lender will not have tried to repossess it yet. The moment you file, the automatic stay takes effect, and you can drive the car without making any more payments until after your discharge is granted, unless the lender chooses to file for relief from the stay which is highly unlikely. If you save up the money that you're not paying on this underwater car loan, then by the time the repo man picks it up, you should have saved up at least a couple thousand to buy a used van outright.