Car Shopping Tomorrow, Question about Length of Loan

[salsa]

I've heard to make sure the car loan is as long as the duration of the chapter 13. We will be in a 5 year plan. I know the interest rate gets dropped in a 13, but if I take out a 6 year loan, will that change to 5 years also?

[HHM]

You heard wrong about dropping the interest rate, you can only modify a car loan in Chap 13 if you have owned it for 910 days prior to filing your case. So, any car loan you get, is what you are going to get, the chapter 13 won't/can't change it.

The naive concern, and those of WEAK attorneys is that the plan payments get stepped up when the car loan expires in the chapter 13, that is not the case. Who is to say you won't get another car.

So just be practical, the car payment needs to be within IRS ownership guidelines, and you should never finance a car for more than 4 years in the first place.

[salsa]

I've had I think three attorneys tell me the car loan interest rate would be dropped, to 1.5% over prime. This is so the creditors will get more money. I thought the 910 days was to cram down the value of the vehicle. For instance, car is worth 5,000 but the loan is 10,000.

[keepsmiling]

You heard wrong about dropping the interest rate, you can only modify a car loan in Chap 13 if you have owned it for 910 days prior to filing your case. So, any car loan you get, is what you are going to get, the chapter 13 won't/can't change it.

The naive concern, and those of WEAK attorneys is that the plan payments get stepped up when the car loan expires in the chapter 13, that is not the case. Who is to say you won't get another car.

So just be practical, the car payment needs to be within IRS ownership guidelines, and you should never finance a car for more than 4 years in the first place.

Don't you need tt approval to do this? Is it likely they will, when one has a relatively new car?

[Nicollette]

I've heard to make sure the car loan is as long as the duration of the chapter 13. We will be in a 5 year plan. I know the interest rate gets dropped in a 13, but if I take out a 6 year loan, will that change to 5 years also?

Have you filed your 13 yet, because if so, you will need approval from the Trustee to incur new debt?

[salsa]

No, I have not filed yet. Need to get 2 vehicles prior to filing, and then wait out the 91 days. Thinking of April timing.

[Flamingo]

I've had I think three attorneys tell me the car loan interest rate would be dropped, to 1.5% over prime. This is so the creditors will get more money. I thought the 910 days was to cram down the value of the vehicle. For instance, car is worth 5,000 but the loan is 10,000.

Have you retained an attorney yet to file and if so, what did he/she advise? Before you do anything and get yourself in a mess with doing this, you need to work with the attorney who will handle your BK. Otherwise you could be in for quite a shock/issue purchasing two new vehicles prior to filing (if you are actually able to purchase if you have to file BK as your credit is probably showing as bad) without competent legal advice.

[salsa]

Have not retained yet. But they said get 2 vehicles stay under 496 each. Interest rate will be reduced and make sure length of loan is as long as chapter 13 plan.

[basketsbears]

Hi,

Our attorney and others here suggested getting new vehicle before filing. We already have a car payment on one that is $495 and since it. Is over 2 1/2 years that loan will be able to be crammed down if we end up in 13. Our new truck's payment is over the allowance, which makes me nervous. We meet with attorney Thursday to pay retainer and set up game plan. My regret on getting truck is we will probably have to delay filing. We do realize we will be paying full amount of truck and not receive any break on interest or anything.

I was shocked we got approved at 7.4%, we were at GMC dealer. We had not missed any payments until we stopped them a month ago. We will have these vehicles until they die for filing for sure.

Good luck!

[salsa]

Well I bought a car yesterday, with a crappy interest rate of 11.5%. But I expected it to be bad. Payment is $505, at the high interest rate. I'm pretty confident it will be reduced as sounds like it's common in my area. Then I'll be closer to $440.

Why will you need to delay filing with getting the truck?

[basketsbears]

I'm not sure if we will. I'm nervous cause it is over the allowance. I didn't realize it made a difference.

[salsa]

How much over?

[basketsbears]

The new payment is $630. Although I was googling stuff online, and it seems like the amount doesn't matter? I am so confused. I cannot wait until I meet with attorney this week!

Also, if we go thru a 13, our interest rate on our Jeep is 9.9% (funny it is higher on Jeep than on truck!) and that would be crammed down so probably would make our payments OK when both are combined. Like I said, I am so confused and the more I read, the more confused I am!

[salsa]

I'm pretty sure I'll have a nervous breakdown before this is all over. I hope to pay half my retainer this week, and hope to meet with the attorney for 15 minutes. Just want to 100% confirm how the interest rate is going to be handled. We have another vehicle to buy, but need to sell our 2001 truck first. The dealer only wanted to give us $1500. I'm hoping to get 4,000 selling outright.

[basketsbears]

I hope it all goes well. And I certainly relate to the nervous breakdown!!! I was feeling that way prior to the truck purchase, now I'm really almost there!