Lawyer suggesting I surrender automobile

[KALA]

We had our meeting about 3 weeks ago and now my lawyer calls me and highly suggests I surrender my car due to the value vs. what I owe. He says there is a possibility the judge may require we do this. Is this true? Has anyone heard of this before? It makes sense, but I've been researching buying a car during bk and it seems near impossible! If anyone has bought a car during bk, got any advice???? I'm not seeing any deals with dealerships, and all loan companies I have called tell me they don't deal with open bk's only discharged! Please help!!! My lawyer is asking me to let him know in a few days! I've never been so stressed in my life!

[lrprn]

We had our meeting about 3 weeks ago...

What meeting, Kala? A meeting with your lawyer before filing or your 341 meeting?

and now my lawyer calls me and highly suggests I surrender my car due to the value vs. what I owe. He says there is a possibility the judge may require we do this. Is this true? Has anyone heard of this before?

If your car is worth more than you can protect with your state's exemptions, yes, it's possible. Which state do you live in? What is your car worth compared to what you owe on it?

...all loan companies I have called tell me they don't deal with open bk's only discharged! Please help!!! My lawyer is asking me to let him know in a few days! I've never been so stressed in my life!

Kala, if you are filing Ch 7, then no lender is going to do a car loan with you until your case is discharged and closed.

Call your lawyer and ask him/her to explain clearly why you need to surrender your car and what you are supposed to do in the meantime if you have no car.

[KALA]

Our 341 Meeting and our car retails around $12K but I still owe $20K (I drive around 130mi/day 5-6 days/wk if that has anything to do with it!) We live in VA. Most lenders I have spoke with do not deal with open bk's, but I have found a few who will deal with us but at a VERY high interest rate 20-24%. There's no way I can live without a car and I am very disappointed with my lawyer. He said something about it to me at our 341 meeting and I've been waiting 3weeks to hear this! I don't know if I should take the chance and keep the car? Or if I should take the financing I can get and refi after discharge? I know what we can afford but I really don't want to risk the second chance of having good credit again. It's hard to believe that in just 2yrs we have gone down the drain!

[CindyLou]

Honestly I would take the high interest and ditch the older upside down car. This is the lesser of two evils!!! You can always refinance after 6 months. Take a look at what other members are doing with Capital One and Christian Community Credit Union. Once you reaffirm the other car you are stuck with that negative equity forever. At least with a new one you are stuck with negative equity in a new car with a warranty. Just be smart and get the most very basic car you can get!!!!! If anyone thinks I am giving bad advice please speak up, but if she has to have a car and these are the only two choices, then I can't see keeping an older car and reaffirming negative equity.

The only other option I can think of is if you could rent a car until discharge. Do you have Rent-a-Wreck or Rent-a-Heap in your area??? You can sometimes get a decent 1999-2001 car for 400-600/month which would be worth getting to the discharge and being able to cut your interest down to maybe 13%. You could be Capital One immediately upon discharge or Ford Credit.

Hope this helps.

Cindy

[SinkingFast]

Part of the BK Code is to look out for your best interests.

It's really not in your favor to be so far upside down on a vehicle. That's the way the Trustee/Judge may see your situation.

There are several 722 Redemption Lenders that do business with people inside of BK. You do have options. And, as has already been pointed out,......... You can refi shortly after discharge at a decent, reasonable rate.

RoadLoans is another viable option.

Generally, the post BK Lenders will all require the vehicle be 2001-2002 or newer and less than 50K-70K miles on it.

Since you're looking at just a short period of time having to depend on it,......... You could even surrender your current car and get an old beater for a few months. Just make due until Discharge. Then apply for a Blank Check and go shopping for something newer.