Buying a new car PRIOR to filing Ch. 7 in California

[caligirl3]

Hi. I'm new here...

I'm preparing to file Ch. 7 in California. After some research I came across the issue of replacing my car (85k miles) with a new one prior to filing in order to get the best loan rate. I currently have negative equity (upside down) on my current car, and with 85k miles on it, it will need to be replaced in the next few years.

I read that it may be beneficial to buy a new one prior to filing. I got a great rate (8.7%) for my credit, and know I wouldn't be able to get that after filing. I've all but decided to go for it. However there's one question... Do I finance the negative equity on my old car ($3k) as a trade-in, or other sale in order to pay off that car loan or do I just let that car loan go in the Ch. 7?

My attorney has (unofficially) advised me that I could let that loan go in the BK, and keep the new one current to help me rebuild my credit...

But then I read some confusing information online about having to pay car loans in full during BK. I didn't understand this much, I'm new to the whole BK thing, so I came here. Is it possible to have one car included in the BK (old, upside down), and keep the new one?

Has anyone done this before?

[caligirl3]

anyone?

[keepmine]

Nothing wrong with getting transportation needs taken care of prior to filing. It's good bk preplanning.
Don't refi any negative equity. Just surrender the old car .

[caligirl3]

Nothing wrong with getting transportation needs taken care of prior to filing. It's good bk preplanning.
Don't refi any negative equity. Just surrender the old car .

PERFECT!!! This is what my Atty. told me. I just wanted to confirm it. Thanks so much!!!

[momofthree]

Ditto what keepmine said.

[caligirl3]

Update...

New car - Actually my credit score came in at 680 and Mazda approved me for 0% interest for 60 months. I got my new car on Saturday. I'm still half expecting the deal to fall through, since I've never been offered a 0% anything before. The loan is from JP Morgan Chase, but I haven't received any paperwork from them just yet. What if Chase doesn't reaffirm my new auto loan? Is that possible? Also, can they change the interest rate? I'm very worried about this.

Old car - My car payment on my old car isn't due until the 27th of this month, but I'm not quite ready to file BK yet (likely in a month). Should I call them to surrender the vehicle or wait until I receive some paperwork on my new auto loan? Should I just not pay and wait until I file BK? Will it matter?

[jeep75]

The deal for the new car is done, your paperwork will be coming, no need to worry.

Regarding the old car it usually will take 90-120 days after you miss the payment before they take it, you are filing in a month so don't worry about that either.

[AlmostAmos]

Ditto on the last comment. Don't surrender it yet, just wait. Heck, continue driving it to save the wear on your new one! They won't get around to repo'ing it until after you file & the stay is lifted.

[shaylo85]

Cali,

I was just in this situation. I bought my new car saturday and I just filed yesterday. My attorney advised me that we will probably have my old car for a couple of months and I haven't made a payment in the last 2 months. So dont sweat it if you are going to file.

[caligirl3]

Thanks for the info. Makes me feel way better... I still haven't missed a payment on my old car, but it's due on Monday. Not going to pay. My new car doesn't require payments to begin until June, so that's good too.

I guess I could keep using my old car, but then I'd have to insure both. I'm looking into keeping it non-operational for insurance purposes.