What happens if I decide I don't want the car after discharge?

[J Armstr]

Hi! I filed BK Ch 7 in June 05 and was discharged Oct 05. Included in my BK was a car loan that I have been current on. The bank wanted me to reaffirm the note but I have not. I don't want the car loan anymore because of its $497/mo payment and the fact that the car is worth $6K less than my note. (I owe $26K on the note and the car is worth $20K).

Does anyone know what happens if I inform the bank that I don't want the note anymore? Will it show up as a repossession on my credit reports? How much damage will this cause to my credit scores?

[J Armstr]

Along this thread...Anyone have any experience renegogiating the terms of the loan with a bank following bankruptcy?

[Kam]

It should not have an effect on your credit report since the debt was included in your bk. The debt should not even show up as a repo. I believe you call the bank and tell them to come get the vehicle. Someone else will jump in here and give you better advice.

In our case, we were not current on our car loan, we did not reaffirm, and we waited for HSBC to come get the vehicle. The vehicle was surrendered and we just received a notice from HSBC saying our vehicle would be sold on 1/11/06 and that we would not be responsible for any deficit.

[StaciMM]

Nothing should change on your credit report-it should show $0 owed, included in bankruptcy.

[J Armstr]

Thank you! That's a huge relief. My credit has been improving since discharge in Oct 2005 and I didn't to lower it with a repo.

[CindyLou]

same thing with me. I filed about 4 weeks after filing. Ford motor said not need to reaffirm....just keep making payments. My credit report says "0 balance" included in BR. The cool thing is that if I decided to return later I can do it without any consequence to me. makes not sense but according to them its easier than dealing with reaffirms..go figure.

[CoachK]

Please confirm this

Does this mean that if I am discharged and I do not reaffirm, I can simply give the car back at any time w/ no additional consequences? I have a car that I pay $500 a month for, and I am at least $4K upside-down on. I have to have it now, as it adds to my monthly expenses (plus I need a vehicle). My Credit Union will give me a loan after my BK, so can I give the current vehicle back w/o a problem (after discharge, of course)?

[StaciMM]

Yes. Keep in mind that some states (under old law) require reaffirmation. As I understand w/ the new law, reaffirmation is also required. On the other hand, if you don't sign anything - in most cases as long as you stay current, the lender won't bother.

Does this mean that if I am discharged and I do not reaffirm, I can simply give the car back at any time w/ no additional consequences? I have a car that I pay $500 a month for, and I am at least $4K upside-down on. I have to have it now, as it adds to my monthly expenses (plus I need a vehicle). My Credit Union will give me a loan after my BK, so can I give the current vehicle back w/o a problem (after discharge, of course)?

[J Armstr]

When I originally posted this question, I was interested in how returning my car back to the lender would appear on my credit even though I have remained current with my payments. I filed Bk Ch7 in June 2005 and was discharged in October 2005. Since filing BK my scores have jumped to the mid 600's. Like you, my attorney recommended that I get a $500/mo car payment to increase my expenses. I originally had a 94 F150 and she recommended that I buy a new, comparable truck so I bought a 05 F150. What I have learned from this forum and others, is that I simply call the bank and tell them I don't want the truck anymore. They will arrange for someone to pick it up or I can drop it off at bank/dealer. The car note will show 0 balance and IIB. Anything else is prohibited by the FCRA. Right now the car note is listed as current/never late, which is good but the car note is strapping me of money.

[accentone]

I'm in a similar situation. But should you wait until you are officially discharged? Seems to me that a trustee would be on to this--that is, buying or keeping a car with a high payment just to increase expenses. Can they not look at your case within a year after your discharged, find that you no longer have a high car pmt, and try and move you into a 13? Just curious, because I would like to give back my car as well, after discharge which will be after I file my taxes, since the trustee wants my dinero from it. thanks.

[StaciMM]

Its a good question-I'd think that if the trustee wanted to question it, it would happen before discharge. A discharged BK can't be converted.

Its not so much an issue for filings after 10/17, as reaffirmation is now required.

[sobroke]

I was discharged in November, and I recently called up the lender and told them that I didn't want the car anymore. This is after I had a minor fender-bender. My lawyer said I didn't even need to get the car fixed!! I just called them up and had them come and tow it away. It is $0 and IIB on my credit report. It didn't hurt my credit scores.

[accentone]

Staci, you're right. What was I thinking? But didin't I hear something about how they can reopen if they are so inclined, for like up to a year?

[StaciMM]

The reopening would involve assets found. That wouldn't change the discharge, but creditors might get some $.