I have a car lease that will be ending in a couple of months and I plan on turning the car in and would like to get another car, this time purchasing (owning) the car, rather than leasing if possible.
I was approved for a car loan today but the interest rate quoted is 14.09%!!!! That is sure to make my payment unmanageable and guarantee default.
I was reading a bankruptcy column by a bankruptcy attorney online and he said one of the options is:
3. Redeem your car loan with a new lender.
Bankruptcy law permits a car owner to reduce the current car balance to the fair market value. For example, if you owe $15,000 and the car is worth only $10,000, then you may be eligible to reduce the car balance by $5,000 with a new, post-bankruptcy loan. The code section is 722 Redemption. However, the current understanding in the bankruptcy community is that you must own the car for at least 910 days before filing bankruptcy to qualify for a car redemption loan.
Recently, I had a very enlightening conversation with in-house counsel at a large car loan redemption company. This company works out deals with you and a new lender to refinance your car post-bankruptcy. I was told that the 910-day rule is not regularly enforced by the original car lender.
Meaning, you can qualify for a new car loan with a balance at the current fair market value even if you bought it one day before filing bankruptcy! The original lender can object to your attempt to strip down the balance, pay off a portion of the loan and eliminate the deficiency. However, very few lenders have been objecting. You may be able to keep your current car, reduce the balance and get a new loan that will report your new payment history to the credit bureaus.
Has anyone gone through this process?
Has anyone had success in getting an interest rate or principal balance reduction using this 722 Code and they had paid on the loan for LESS than the 2.5 years??
Thank you!
I was approved for a car loan today but the interest rate quoted is 14.09%!!!! That is sure to make my payment unmanageable and guarantee default.
I was reading a bankruptcy column by a bankruptcy attorney online and he said one of the options is:
3. Redeem your car loan with a new lender.
Bankruptcy law permits a car owner to reduce the current car balance to the fair market value. For example, if you owe $15,000 and the car is worth only $10,000, then you may be eligible to reduce the car balance by $5,000 with a new, post-bankruptcy loan. The code section is 722 Redemption. However, the current understanding in the bankruptcy community is that you must own the car for at least 910 days before filing bankruptcy to qualify for a car redemption loan.
Recently, I had a very enlightening conversation with in-house counsel at a large car loan redemption company. This company works out deals with you and a new lender to refinance your car post-bankruptcy. I was told that the 910-day rule is not regularly enforced by the original car lender.
Meaning, you can qualify for a new car loan with a balance at the current fair market value even if you bought it one day before filing bankruptcy! The original lender can object to your attempt to strip down the balance, pay off a portion of the loan and eliminate the deficiency. However, very few lenders have been objecting. You may be able to keep your current car, reduce the balance and get a new loan that will report your new payment history to the credit bureaus.
Has anyone gone through this process?
Has anyone had success in getting an interest rate or principal balance reduction using this 722 Code and they had paid on the loan for LESS than the 2.5 years??
Thank you!
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