Can I pay just what it's worth?

[brokeinmich]

I've filed for chapter 7 bankruptcy and opted to keep my car and keep paying on it. But I recently received a letter in the mail from some company claiming that the law states I can keep my car and only pay the worth of it and not what I owe. Is this true for Chapter 7 or is it a scam for something else? I've tried getting ahold of my attorney to see what he says but he's not returning my phone calls. He's pretty much a jerk. Any question I've had in the past he's not answered. I'm running out of time.

[newstart]

I received a few letters like that and mine was referring to a 722 redemption loan to keep car by paying fair market value.

[StaciMM]

Redemption is a 'right' of sorts in ch. 7. If your car is worth $5000 then you can redeem it by paying the creditor $5000.

[brokeinmich]

yeah I believe that was the company. What does that mean? Is this a financial place trying to get me to refinance my car? I owe about 9500 on my car and its only worth about 4500. Will it be worth it or is it a trap? I planned on keeping my car anyway.

[StaciMM]

How much are your payments, and how long do you have left? You could possibly get a redemption loan, and pay 30 X $252 = $7560*. Meaning, even if you have 0% interest on the $9500, you'd save nearly $2000 by paying what its worth rather than what you owe.

*Calculated $5500 loan @ 25.99% APR for 30 months. I estimated $1000 for loan origination fee & attorney fee though I doubt they'd be as high as $1000. Any costs associated w/ the loan would be included.

Basic requirements would be that your vehicle has average to low miles for its age, and you have good job stability. Also, no past issues w/ US Bank. (That is who they use for financing.)

[StaciMM]

PS-
I did get a replacement vehicle thru them, gave up the vehicle we had as it was high miles and in poor condition. The 25.99% is the rate to expect. On the bright side, if you have the ability to pay extra, you save a lot and get it paid off sooner. For example, if you paid $342 instead of $252, you would pay it off in 20 months instead of 30, saving more than $700 in interest.

[brokeinmich]

My payments are $340 and I have until April 08'. I've only had it a year and I've never been late on a payment. I'm pretty clueless on the whole thing. So what you're saying is they refinance with another bank? What happens to my original loan?

[brokeinmich]

.... and what is a redemption loan?

[StaciMM]

I thought you meant your balance (if you paid it off now) is $9500, looks like that is what you'll pay if you keep going as scheduled. ($340X28=$9520.)

There are a couple of companies that work w/ people in ch. 7, and issue redemption loans where they loan you the money to redeem your vehicle. Its basically a refinance in BK based on what the vehicle is worth.

My payments are $340 and I have until April 08'. I've only had it a year and I've never been late on a payment. I'm pretty clueless on the whole thing. So what you're saying is they refinance with another bank? What happens to my original loan?