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    Car Loan - Reaffirmation and Bank Not Willing to Deal

    We have received our case number and our court date is now set for March. I called PNC bank for the loan on our car which is currently upside down by $11,000. I told them I was in bankruptcy and I was advised to walk away from the car. I asked them if they would be willing to work with me on new loan or lower the payments due to the negative equity and in return I would re-affirm the debt. The guy said let me talk to my supervisor to see what we can do. He came on the line shortly after and stated sorry nothing we can do for you. I mentioned to him so you guys would rather I walk away from the car whereby you guys would lose money on the repo and sale rather than work with us? The guys said sorry nothing we can do and I told him I would be dumping the car then.

    My question is should I hang on or just dump it. It is a 2016 Dodge Charger RT, but it is already upside down by $11K. Do you think they may call back wanting to deal later? Should I just stop paying them?

    Thanks,

    Raveman

    #2
    If a redemption loan is out of the question, then yes, you should stop paying and surrender this car. There is no rational reason why anyone would agree to continue paying on this much negative equity, much less reaffirm it! Keep in mind that your odds of being approved for a redemption loan depend on your auto loan payment history, so I would not recommend defaulting on the loan until you have decided that you are definitely going to surrender the vehicle.

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      #3
      Originally posted by raveman007 View Post
      My question is should I hang on or just dump it. It is a 2016 Dodge Charger RT, but it is already upside down by $11K. Do you think they may call back wanting to deal later? Should I just stop paying them?
      When exactly did you purchase this vehicle (checking to see if it's a "910" vehicle). I would go for a redemption and just chop off that $11,000 of negative equity.

      Stop paying them! The reason is that you're either going to walk away, or redeem. Paying them is like flushing money down the toilet.

      I have not found one single creditor willing to reaffirm with a lower balance. Some will re-ammortize and lower the APR, but I haven't read about one -- or at least I cannot recall one -- ever reducing the balance. Your recourse is a redemption loan. You will need to call the folks at 722 Redemption Funding and see what they can do.

      Otherwise, your creditor's advise is spot on... walk away.
      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
      Status: (Auto) Discharged and Closed! 5/10
      Visit My BKForum Blog: justbroke's Blog


      I am not an attorney. Any advice provided is not legal advice.

      Comment


        #4
        I called the 722Redemption folks and they said the reason they can't get me a loan is because I am not upside down enough. He said that by the time I go through the process I will probably be around the same payment which right now is at about $600. In short 722redemption couldn't help me. Payment is due this week and I don't want to pay it, but I am worried they will repo the car right away since they know I am in bankruptcy. May have to walk away and see if I can hang on with one car for now.

        Comment


          #5
          What did you put on your Statement of Intentions?
          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
          Status: (Auto) Discharged and Closed! 5/10
          Visit My BKForum Blog: justbroke's Blog


          I am not an attorney. Any advice provided is not legal advice.

          Comment


            #6
            As long as you put "redeem" or "reaffirm" on the statement of intentions, your lender cannot repossess the car, even if you stop paying now. The automatic stay is in effect, and unless the lender files a motion for relief from the stay (which few do) they must wait until discharge. You could potentially drive the car payment-free for several months.

            However, if you put "surrender" on the statement of intentions, then the lender can easily seek relief from the stay on the grounds that they are merely requesting that you comply with your stated intention. In that case, the car can be gone within weeks of the first missed payment. That is why we advise people to always put "redeem" or "reaffirm" even if the ultimate intention is to let the car go.

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              #7
              With all due respect to bcohen, the automatic stay ends 30 days after the 341 meeting if a debtor fails to act on his or her "intention" within that time. Pursuant to 11 USC 362(h), not only is the stay lifted, but the property is no longer property of the estate. The entry of the discharge is not relevant under such circumstance although some lenders will wait. Other lenders will take back their property once the 30 days expires if the debtor failed to act.

              Acting on your intention typically means signing a Reaffirmation Agreement, filing a Motion to Redeem or making arrangements to surrender the vehicle.

              Des.

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                #8
                Thanks for the responses. I happened to speak to my lawyer today and asked this very question and she stated to wait until I get the reaffirmation document from the lender and then do what I want to do. I think they left this open for now on the form. I got to court on 3/1/19 so I am about two weeks away. I have two cars at about $600 each and I am definitely walking away from one. I am worried I won't be able to find something quick enough if I walk away from both as I only have about $1200 bucks in the bank for emergencies. Any recommendations appreciated!

                Comment


                  #9
                  Yes. My recommendation is to stop throwing good money after bad. Since you won't be reaffirming or redeeming either of these loans, the smart thing to do would be to stop paying now, and start saving toward another used car. Although despritfreya has pointed out that the lenders could have the cars repo'd before discharge, I would argue that it is unlikely that they would do that unless you put "surrender" on your statement of intentions. In fact, we routinely hear about people with late-model cars who haven't made payments in months, and even after discharge they are still driving the financed car. Some even had to call the lender and ask them to come pick up the car!

                  Comment


                    #10
                    Bcohen, thanks for the info. I called the lawyer to change my retain to surrender and she said the reason it is set up this way (retain) is so I can show I have the heavy payments which will help push through the Chapter 7 BK. Once that is approved I can surrender both cars, if I want, under the BK. She told me to make this month's payment, which I have, to keep current and then after Friday's BK court date I can stop paying on them if the Chapter 7 is approved. I am hopeful I can drive them for at least a couple of months until I find something for my wife and I. I don't have a lot of cash to put down so I may have to find a 10% under loan to one of the vehicles. I can buy myself a beater for $5K and get something better for my wife and kids to drive around. I am hopeful SunTrust will deal with me on my wife's Cherookee as it is only two years old and she loves it. If not we will give it up.

                    Comment


                      #11
                      Well I got in touch with 722 redemption yesterday on the Charger and the told me they couldn't help me because my payment with them would be about the same. The car is worth about $23K and I owe $32K. The would give me a loan between at $23k - $24K, but it would be at about 18% interest for five years which would put the payment right around the $600 I pay now. I told them that interest rate is absolutely ridiculous and I don't understand how they they they are helping people. All the money you same in the redemption you would pay in interest. In short I am stuck so I will have to walk from the car.

                      Comment


                        #12
                        raveman007 I did the redemption loan at 18%, but I refinanced 6 months after discharge at about 7% (with Navy Federal). It's a chance that I took, but I shed $11K from one car!

                        The key with Redemption loans is to refinance it after 6 months. Sure you'll pay about $200 in unnecessary interest, but you really saved $11,000 - $200 = $10,800 (or more over the life of the loan). In order to refinance at a lower rate, you will have to obtain and maintain very good credit (with low balances) until you get the refinance.

                        At least that was my strategy and it worked for me.
                        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                        Status: (Auto) Discharged and Closed! 5/10
                        Visit My BKForum Blog: justbroke's Blog


                        I am not an attorney. Any advice provided is not legal advice.

                        Comment


                          #13
                          That is actually not a bad idea. I will put this through the full process and see what kind of interest rate and payment they give me. I belong to a credit union, who we have our home with, that may do this for us since we already have a loan and track record with them. If they can't help I will probably walk away from both of these. The negative equity is -22K between both vehicles. I haven't signed affrim paperwork and don't plan to.

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