Would this be a red flag?

[Ann]

I know I have asked this one before but in different way. I will try again hoping to get much needed advice here. We are hoping to file in December for chapter 7. I have not contacted an attorney as of yet. We have 2 cars with only 1 year left to pay. We do not owe more than what is left on our loans. I'm thinking we should replace the cars now before filing so that we have no equity and really for the most part just to make sure we have autos that will see us through in case we need to file 13! I know our credit scores are low but I have been searching the internet to look for online car loans that cater to those with less than perfect credit. If we purchase and are approved now does that raise a red flag??? Seriously my extended warranty just ran out and I have NO WAY of paying for repairs should they come our way! Help!

[HakunaMatata]

My first consult attorney stated he encourages everyone to secure reliable transportation prior to filing (preferably vehicles no more than two years old) regardless of C7 or C13. The lower interest rate and warranty protection are major factors.

Ironically, I purchased a newer car (three years old with warranty) prior to pondering BK as my beloved ten year old car was becoming questionable in terms of reliability. I, too, was concerned with this recent purchase and fearful it could produce a red flag. I met with two additional attorneys and neither indicated this would be an issue. Transportation is an absolute necessity in many areas and the courts recognize this.

It sounds like you should explore the possiblity of obtaining a newer vehicle or obtaining some type of legitimate extended warranty. It would be terrible to reaffirm a vehicle only to discover a repair expense prevents you from using it.

[jribe]

I know I have asked this one before but in different way. I will try again hoping to get much needed advice here. We are hoping to file in December for chapter 7. I have not contacted an attorney as of yet. We have 2 cars with only 1 year left to pay. We do not owe more than what is left on our loans. I'm thinking we should replace the cars now before filing so that we have no equity and really for the most part just to make sure we have autos that will see us through in case we need to file 13! I know our credit scores are low but I have been searching the internet to look for online car loans that cater to those with less than perfect credit. If we purchase and are approved now does that raise a red flag??? Seriously my extended warranty just ran out and I have NO WAY of paying for repairs should they come our way! Help!

it's not a red flag to buy a different vehicle.

Just be careful on how much you spend and that it's not considered a "luxury" car. Also, don't pay cash unless you can cover it in exemptions. Try to put only a couple thousand down.

[Ann]

it's not a red flag to buy a different vehicle.

Just be careful on how much you spend and that it's not considered a "luxury" car. Also, don't pay cash unless you can cover it in exemptions. Try to put only a couple thousand down.

Thanks for the advice... but what about both cars??? Should we purchased 2??? Does anyone here know about trading these in? What would be my chances now if we have already defaulted on cc payments and loans? Also, I know this is a really dumb question but... should we be explaining our plan as to why we have bad credit and will be filing soon? Please do not hate me for asking that one... I know it is a really far out question but I do need to know!

[2manybills]

We did not trade in our car, we voluntarily surrendered it prior to filing. Why would you want to roll an upside down vehicle into your new car payment.

Also, we kept the "new" payment lower than the "old" payment, so that the vehicle would not be looked at as a luxury vehicle.

[jribe]

Thanks for the advice... but what about both cars??? Should we purchased 2??? Does anyone here know about trading these in? What would be my chances now if we have already defaulted on cc payments and loans? Also, I know this is a really dumb question but... should we be explaining our plan as to why we have bad credit and will be filing soon? Please do not hate me for asking that one... I know it is a really far out question but I do need to know!

personally; i let 2 cars get repoed because we owed about 10k more on each that what they were worth. Bought a used car (3 yrs old) for a great price before our credit was too bad.

I didn't want to "trade in" the cars because they just take on the extra if you're upside down.

If your credit is really that terrible; it sounds like you'll have a hard time getting a loan- unless you go through somewhere that advertises that they work with poor credit. Call places first and find out what they're guidelines are.

Do you need 2 cars is the question. We had 2 cars, but my husband started his own business from home; so we bought him a scooter to get around when he needs to. Beats paying $300 a month for a car that's not really needed...

You need to look at your expenses and find out whats affordable for you in regards to cars and what you need. Obviously you don't want to spend a fortune and then file BK. You don't want to put yourself in a load of debt just for cars....

[Ann]

Why would I be considered "upside down" on my cars if I could sell them for more than what I owe? I looked up on KBB and I would get maybe 500.00 after I trade them in. Does anyone here know about a company called UP2Drive? I was doing some research. I just want to make sure I can get the financing to do this at a decent rate. Not so sure with my current credit rating. Please respond

[HakunaMatata]

Why would I be considered "upside down" on my cars if I could sell them for more than what I owe? I looked up on KBB and I would get maybe 500.00 after I trade them in. Does anyone here know about a company called UP2Drive? I was doing some research. I just want to make sure I can get the financing to do this at a decent rate. Not so sure with my current credit rating. Please respond

You're not upside down if you have equity in the vehicles (owe less than they are worth).

I wouldn't exclusively rely on KBB/NADA/Edmund's for hard numbers. Instead, use them as guides. I always negotiate a significant amount OVER these values for my trade. I go to dealerships armed with knowledge and a projected bottom line. Oftentimes, dealers have greater flexibility with trade-in values than they do with the purchase cost. If they want the sale, they manipulate numbers to achieve my bottom line. I've been chased out of dealerships after being offered a ridiculously low trade-in value only to find my sales rep needed to talk to the sales manager. My trade-in value magically increases (they often "overlooked" some fabulous feature) and the deal is finalized.

I'm not familiar with UP2Drive. Keep in mind, dealers often have a range of financial resources. You may not need to explore financing on your own.

[2manybills]

Ann: If you can get them to trade at higher value then you should go for it. Remember with the current market and folks not buying, car dealers are wheeling and dealing for sure. Use that to your advantage.

[Ann]

Thanks all for your input. I just made an appointment to see a lawyer this saturday. I cannot believe she would except Saturday appointments. I will for sure discuss buying a car (cars) with her. Very scary. I'm dreading this.

[HakunaMatata]

It's scary because it's new. Keep reminding yourself your intentions are to regain your financial footing and secure a fresh start. Best of luck to you!!

[DSIG]

Thanks all for your input. I just made an appointment to see a lawyer this saturday. I cannot believe she would except Saturday appointments. I will for sure discuss buying a car (cars) with her. Very scary. I'm dreading this.

Ann, dont be afraid and be forthcoming on all your financials. I withheld info from my attorney because I was afraid, and then I disclosed my details later and wasted valuable time. Everything eventually made it on the schedules but I could have avoided the delay by just providing all the details upfront. I have a mtg with him yesterday to go final and file once and for all.

Weekend hours are not unusual. I bet that is when they make most their money. People who work cannot take time off in the week.