Surrendering auto and new financing

[brown153]

I have a couple of questions about surrendering auto following BK and new auto financing.

My wife and I were discharged in July 2007. The auto was included in the BK, but we have been continuing with the payments and are current. We DID NOT sign a reaffirmation agreement. So, my questions are;

1) Can we voluntarily surrender the vehicle at this point and incur no liability? The debt was included in the discharge.

2) What are the odds of obtaining new financing? I've read several posts on success with Capital One auto finance, and we were thinking about using them. It's been a year since discharge, my FICO still is horrible (547) but my wife's is not as bad (628). Although the auto is listed on the credit report as included in the BK, I know that at least one of the credit bureaus is listing the payments as current.

Any advice or help appreciated!

[Flamingo]

I am responding to #2 of your posting. Right now it is even difficult for those with good credit to get a loan. Lenders/Banks are extremely picky. With your scores as you quote them, expect denials or acceptances with loans bearing high interest rates or other fees. Before you accept any offer with high interest rates or fees, read all the fine print and double check everything. This forum is full of postings from folks who were allowed to drive off with a new vehicle from the lot and then the dealership calls them and tells them then cannot get financing on them at what was offerred. Scams are ripe for folks out of BK who need a vehicle and are stuck - do your homework.

[HHM]

1. Yes. So long as you did not officially reaffirm the debt and you listed the creditor in your BK, you can walk away from that car without owing any money to the finance company.

2. Well, with a recently discharged BK AND a vehicle surrender, your odds are not good. You will need to bring some money to the table in the way of a down payment, at least enough to cover taxes, title, etc. And even with that, your interest rate will be very high. Are you sure you really need to surrender the car?

[sjr1]

follow up question to surrendering for HHM

... so if you do a ride thru on your auto loan, then decide to surrender it at a later date, it shows up on your credit report as a surrender IN ADDITION to showing up as IIB?

I have been unclear about this point. Since we still have a few years left on our auto loan, I was hoping to be able to ride thru for a year or two, then after the FICO's were up a little and some $$$ was saved, we could get a new one and surrender the old one at that point.

However, if it hits the credit report again as another negative, I guess we should just stick through the length of the loan.

[brown153]

We are currently paying $517 a month, with a $20,000 balance and a 13.75% rate, on a car worth perhaps $13,000. Since we only have a loan on record for one car (the other is paid off) and since we have a good payment history (even though it was included in the BK, Equifax is showning all monthly payments as current), we wanted to purchase the new car prior to surrendering the old one.

I expect the terms of the new loan to be either the same or not much better than the old one, The idea is basically to purchase a similar car with similar mileage and knock off several thousand off the loan, and then surrender the old car.

And a follow up question: when we apply for a loan as co-applicants, does the lender take the higher of the credit scores between the two people, or just the person listed on the top of the application? Obviously in our case I would like to use my wife's credit but all of our income. I'm just not sure if including me as a co-applicant would automatically tank the application since my FICO is almost 100 points below hers.

[krielly]

I know in our situation, when I was quoted an interest rate from our CU, she asked if my husband had good credit, as perhaps they could get us a better rate.......he didn't, so we didn't go there, but I imagine all lenders have different criteria..........

Regarding the "two hits on your credit" BK and vehicle surrender..... I don't think this is the case. Even though you are currently paying on your vehicle, it was still included in the BK. We started off paying a vehicle outside of our 13 plan, but ended up surrendering it a few months down the road. The credit reports just list it as IIB - no reposession/surrender indicated on CRs.

If you can purchase a vehicle BEFORE walking away from the current one, you should go for it, but if not, I don't think it is a definite double hit on your credit. If they list it as a surrender or repossession, I believe you could dispute it as being IIB.

PS: seems as though your credit score should be higher than it is considering you have been discharged. Have you obtained copies of your reports and checked to see that things are reported accurately? you may be able to improve your score (and thus get a better interest rate).

Good luck!
K

[brown153]

I know in our situation, when I was quoted an interest rate from our CU, she asked if my husband had good credit, as perhaps they could get us a better rate.......he didn't, so we didn't go there, but I imagine all lenders have different criteria..........

Regarding the "two hits on your credit" BK and vehicle surrender..... I don't think this is the case. Even though you are currently paying on your vehicle, it was still included in the BK. We started off paying a vehicle outside of our 13 plan, but ended up surrendering it a few months down the road. The credit reports just list it as IIB - no reposession/surrender indicated on CRs.

If you can purchase a vehicle BEFORE walking away from the current one, you should go for it, but if not, I don't think it is a definite double hit on your credit. If they list it as a surrender or repossession, I believe you could dispute it as being IIB.

PS: seems as though your credit score should be higher than it is considering you have been discharged. Have you obtained copies of your reports and checked to see that things are reported accurately? you may be able to improve your score (and thus get a better interest rate).

Good luck!
K

That's the plan, to purchase the second vehicle and then surrender the first. Then we will deal with how it is reported. For now, the credit report lists the auto as included in BK but also shows 15 current payments post filing. I would think that would be better than a repo/surrender.

We pulled our reports and on my wife's report, one of the prior debts is currently listed as 120+ days late on 2 of the reports with no mention of the BK. Once we get that straightened up, hopefully hers (628) will rise. On her Experian report, there is no mention at all of the auto loan, and that score is 679. As for mine (547), it's likely due to lots of 30, 60, and 90 day lates which were immediately prior to the BK. I think I just have to wait it out for those!

[brown153]

Road Loans

Well we just got pre-approved from Road Loans. We got rejected by Capital One, I'm guessing because I had a Capital One card included in the BK. But there is hope out there!

[beachymama]

What interest rate did you get from RoadLoans? They quoted me 14.09% today for $26,000 max 72 months.

[brown153]

What interest rate did you get from RoadLoans? They quoted me 14.09% today for $26,000 max 72 months.

Oh, it's bad. 18% for 72 months, max of $20,000. But we are looking in the 10-12k range, and plan on doubing up payments, so hopefully we can refi the rate down in a year or so. After a BK, lousy rates are what I expected!