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Did you reaffirm your auto?

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    Did you reaffirm your auto?

    I’ve read here that reaffirmation is a bad ideal. I did on my auto and the reasoning was it was only 2 years old with low miles and I owed a little less then it worth. I figured I would pay it off and keep on driving it , hopefully through worst years of bk ruining the credit. Also , I don’t have a nice lump sum of cash to buy outright anyway.

    #2
    Don’t want to make this post about me but my situation was similar. I purchased a new car in 2017 and another car in Aug 2019. I filed for BR in Sept 2019, had my 341 meeting in Oct 2019 & should be discharged hopefully the end of this month or next month. I did not reaffirm my car that I got in 2017 and is waiting for my credit union to pick it up. This debt for this car no longer shows on my credit report but my newest vehicle I got in Aug is reporting on my credit as regular on time payments.

    If you are almost done with paying on your car, keep doing so! Reaffirm your car. It always look good on your behalf that you kept them out of BR (which they still will have notation about it). if it’s financed at a credit union or bank. They will want to help you in the long run with other loan products once you get back on your feet especially if you never skipped a beat with payments.

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      #3
      2nd newly purchased car right before BR was reaffirmed.

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        #4
        I'm so confused on what to do with my car. Its a 2018 Wrangler and I am about 15K upside down on the loan, and have horrible high car payments. Oh and credit sucks. I just want to hide out under my blankets and cry.

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          #5
          If I was 15k under I’d definitely include it in a bk. Any other solutions has to be better then keeping that. Can you afford to go buy something used and cheap before you file?

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            #6
            I have never financed a car--I always buy cheap old cars that I can afford outright, and then pay for the repairs to keep them running. However, I am very well aware of the types of interest rates offered to car buyers, both before and after bankruptcy. For most people, credit scores will improve as a result of filing, although lenders may charge slightly higher interest rates to those fresh out of bankruptcy.

            Therefore, it might make sense for someone to retain a small amount of negative equity (certainly no more than $2500) if the loan has a very competitive APR. However, under no circumstances would it make sense to retain even $5000 of negative equity, let alone $15k. You should stop paying on this Jeep now, as you are either going to surrender it or redeem it. It makes no sense to do a "stay and pay" on this much negative equity, let alone to reaffirm it!

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              #7
              Originally posted by Layla55 View Post
              If I was 15k under I’d definitely include it in a bk. Any other solutions has to be better then keeping that. Can you afford to go buy something used and cheap before you file?
              I was preapproved for up to 16K. Should I go ahead and get another car and let the Jeep go? I owe 43,000 on it and it’s worth 24,000 (according to car max). I haven’t filed yet...

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                #8
                Originally posted by bcohen View Post
                I have never financed a car--I always buy cheap old cars that I can afford outright, and then pay for the repairs to keep them running. However, I am very well aware of the types of interest rates offered to car buyers, both before and after bankruptcy. For most people, credit scores will improve as a result of filing, although lenders may charge slightly higher interest rates to those fresh out of bankruptcy.

                Therefore, it might make sense for someone to retain a small amount of negative equity (certainly no more than $2500) if the loan has a very competitive APR. However, under no circumstances would it make sense to retain even $5000 of negative equity, let alone $15k. You should stop paying on this Jeep now, as you are either going to surrender it or redeem it. It makes no sense to do a "stay and pay" on this much negative equity, let alone to reaffirm it!
                THank you for that advice. I am looking for a reliable used car to get me around for the next few years. What does redemption mean, by the way??

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                  #9
                  Originally posted by Layla55 View Post
                  If I was 15k under I’d definitely include it in a bk. Any other solutions has to be better then keeping that. Can you afford to go buy something

                  used and cheap before you file?
                  So, by including it- do you mean listing them as a creditor and letting them take it?

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                    #10
                    Yes.. you include debt on the vehicle to be discharged and then surrender it. Reaffirm a vehicle means to go back into contract with the lender on a vehicle, house etc in a bk. You don’t have to . I guess it’s a pledge on your part sort of to agree to continue on with your loan. But you don’t obviously want to do that if it’s a bad deal, under water, etc on something. You want that gone.

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                      #11
                      Originally posted by Layla55 View Post
                      Yes.. you include debt on the vehicle to be discharged and then surrender it. Reaffirm a vehicle means to go back into contract with the lender on a vehicle, house etc in a bk. You don’t have to . I guess it’s a pledge on your part sort of to agree to continue on with your loan. But you don’t obviously want to do that if it’s a bad deal, under water, etc on
                      something. You want that gone.
                      The interest rate isn’t too bad- but yeah that negative equity is awful. This is so stressful. I meet an attorney tomorrow- praying I somehow qualify for a chapter 7.





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                        #12
                        Originally posted by JLM0706 View Post
                        What does redemption mean, by the way??
                        It means that you file a motion with the bankruptcy court to determine the current value of the vehicle, and to pay that amount in one single payment, which the lender will be compelled to accept as payment in full, and to release its lien on the title. The funds for redemption can come from money that you already have (and exempted), money gifted to you by family after the filing date, money earned as wages after the filing date, or a so-called "722 redemption loan" specifically designed for this purpose. The idea is that the negative equity gets wiped out, so you're only paying for what the car is worth today.

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                          #13
                          Originally posted by Layla55 View Post
                          If I was 15k under I’d definitely include it in a bk. Any other solutions has to be better then keeping that. Can you afford to go buy something used and cheap before you file?
                          I met with an attorney (who I plan to retain) Friday. He basically told me the high payment on the car is a good thing for me, since we’re trying to pass the means test to get into a 7; and that it will decrease monthly payments if i have to choose a 13. This seems really off to me. Other than this, he seemed very knowledgeable and I liked him.

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                            #14
                            In your case keeping the vehicle sounds reasonable to me.. you need the extra expenses to get into a chapter 7. If you were definitely qualified for a 7 then keeping the car would be crazy. You need deposable monthly income to be as small as possible so you can’t afford payback in a chapter 13.

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                              #15
                              A monthly 5 year payment in a 13 would probably be way worse then this car payment in a 7 bk. Also , you might figure out a way to get out from under that loan once you discharge from the 7.

                              Comment

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