Trade in car during Chapter 13

[bebbing47240]

My husband and I are considering filing Chapter 13 with 100% payback (minus the "cram down" amount on the car).

We are concerned that we may need to trade in the car in 3 years (we will probably have to do the 5 year bankruptcy plan) and we weren't sure if that is possible in a Chapter 13.

Does anyone have any experience with this?

Our main reason for filing is because we are so "over/under" on this vehicle.

Our potential attorney suggested even possibly turning the car in and getting another loan that wouldn't be included in our Chapter 13 - but we would still owe the difference on the first loan.

Thanks in advance!

[DUMBAGAIN]

Maybe I'm not understanding...The reason your filing BK is due to you being over/under on your car?

[bebbing47240]

Yes, that is the main reason.

We have some old medical collections, but nothing too concerning. Our credit card debt is less than $2000.

We are $6000 over/under on the car loan. It is also 18%

[DUMBAGAIN]

OHH, are you sure that's the right decision? You only owe $2000 in other bills? Gosh, (unless I'm still missing something), I think I would really think about that. I mean your going to take a 7 year hit on your credit for not much money. The interest being 18%, did you have credit issues in the past? Are you current on the car payments now?

[bebbing47240]

We filed chapter 7 in 2002. We got this auto loan in 2004. We do have medical collections around $7000.

We are current on the car payments now. We have been 30 days late once before. Our credit scores are 615/520, so I'm not sure what to do.

Do you have any other suggestions besides Chapter 13 for getting out of such a negative equity situation?

[DUMBAGAIN]

Not off the top of my head, I'm gonna have to think about this one, however hang tight some of our experts will be along shorty I'm sure to offer up some good advise. I just hate to see you file if you don't need to. How much do you owe on the car?

[bebbing47240]

We owe right under $12k. It's a 2001 Chrysler 300m and it's worth $5k - $6k trade in.

I've thought about trading it in, but with the negative equity - I think it would just send the payment skyrocketing and we can't afford that.

[bebbing47240]

I forgot to say - THANKS!

[hughthehand]

I would pay off the car, work out a deal with the medical bills, they will take payments, and continue paying off your credit cards. Just think, an attorney will cost you about $3000 or more for a chapter 13 filing. There is your credit card bills. You could pay $25 a month on your medical bills. Pay the car off under your current payments and kick back some money for repairs. No matter what, you will always be in a negative equity situation with an auto. They lose value so quickly. Also, if anything, take any extra money and start paying on principal on your auto loan. That will take a bite out of the 18% they are getting. You're in much better shape than I was.

[bebbing47240]

Thanks for the advice. What did you think about the credit cards?