Car Buying Question Before 341

[98daffodils]

Hi!

I have filed a CH 7. And I am upside down on my current car with a terrible interest rate of 26%. I have 4 more years to pay on this but I do love the car. I had planned to "retain and pay" (my area will not permit a reaffirmation)... but a friend has a dealership who has a program that helps BK buyers. Today he found me a car exactly like mine, only 3 years newer. The lender is willing to give me a 14% interest rate with a $1000 down payment, and the monthly payments will be lower.

My lawyer has told me this is Ok to do (I asked since I haven't had the 341 yet) but my concern is the dealership is telling me I have to surrender my current vehicle to THEM. Said they would issue a letter and handle the arrangements with my current lender.

Has anyone ever heard of this? Seems odd to me that they would say I had to surrender the vehicle to them, especially since my petition says "retain and pay". I am not late on any payments, nor have I ever been, so my current car is current. The current car is upside down and is not being traded or anything either. Am I crazy?

[despritfreya]

You should shop around. It sounds like the dealership wants the vehicle as a trade-in. The negative equity (balance on the loan) may end up being added to your purchase price. Unless you get assurances (in writing) that such is not going to happen, walk away.

Just my personal opinion.

Des.

[98daffodils]

Thanks Des - I really appreciate it. That's what I was thinking too, so I asked them to verify that is not the case. They said no, but I will double check it when I go look at the car and read the contract. They have a special bankruptcy department, so I know they know the rules, but I just thought it was odd they wanted me to surrender the car. He said "they won't let you keep both". I was thinking yeah sure, if I wasn't in BK and I was trying to pay for both and the salary wasn't enough.... but I can surrender my current car anytime and not pay... so I thought it was weird. I am waiting to hear back from my lawyer too - she told me it was totally OK to get a car whenever I want (and I'm doing it now because mine needs a big repair coming up soon and its underwater anyway). Plus I don't like the idea of paying for something for 4 years diligently and getting now credit for on time pays on my CR.) But I'm also wondering what the Trustee will think at the 341.... interest rate is lower and so is payment.

[despritfreya]

The dealership said "they won't let you keep both"? Who is "they" - certainly not the bk court or your trustee. You are in a Chapter 7. The court and the trustee do not care what you purchase after you filed. The lender of the old car does not care either so long as it is getting paid if you keep the car. It is always possible that the finance company for your new car wants to see the old one "gone", but that has nothing to do with bankruptcy and everything to do with a perception that you may not be able to keep payments current on both. Regardless, you have decided to walk from one vehicle and purchase a different one. There is nothing wrong with that.

Enjoy the new vehicle.

Des.

[98daffodils]

Thank you Des. Sorry, by "they" I mean the lender. When the salesman said "be sure to bring your current vehicle" and I asked why, he said "they won't let you keep both". I assumed he meant the lender....but I thought it odd because I technically don't have to pay for the current car.... so not sure why they would worry about my being able to afford both.

My Statement of Intention said I would retain and pay (since the district here doesn't do reaffirmations unless you are required to by somebody like Ford or a Credit Union). I assume in my 341 next week that the Trustee will ask me.... I just didn't want it to look bad....