What exactly happens if vehicle is surrendered???

[basketsbears]

Hi,

Even though our attorney said she doesn't anticipate a problem with the truck we just bought, she said worse case scenario is we give the truck back. I hate to be dense, but if that happens, is it kind of like a repossession, then we are not obligated for payment, etc? There wouldn't be any equity in for trustee to sell it, so not sure other than if we decide to turn it it, why we would have to?

Also, we signed up for a maintenance agreement on truck, which was also very expensive. Are those worth the money? It added a few thousand to the cost of the truck. I think looking back, I was kinda in shock over the whole thing. The taxes on the truck, maintenance agreement and GAP insurance (which I wanted) pretty much negated the $5000 rebate from GM.

We were also told that it was for 72 months, then when I signed up online (we rec'd welcome letter from Ally) with the account it is for 75 months. All we ever talked about was a 72 month loan, and I did not notice 75 months on the actual loan when I signed it. I will recheck the actual document when my husband gets home. I didn't even know they did loans for 75 months???? I'm a little upset by this. I have no one to blame but myself, but am pretty shocked at that one.

After talking with my husband, I may email attorney to look closely how we can return it, if she thinks it is in our best interest. If we do, is that fraud?

Sorry for all the truck questions.

Lynn

[momofthree]

My #1 concern would be if surrendering the truck would provide enough DMI to fund a ch. 13 plan.

I believe you said the payment was around $600/mo. If you surrender the truck, that frees up $600 a month in your budget--which could potentially push you into a ch.13 and you'd be without transportation. Not a good position to be in. It may be worthwhile to keep the truck at least until after discharge so that you can count the payment. This is assuming they allow you to keep it--you may be required to surrender it anyway since it's over the IRS standard allowance.

As long as you don't reaffirm, then you can walk away from it after discharge if you so choose--but you may have a difficult time financing a new vehicle with a recent bk, not sure how that works...

[basketsbears]

Hi,

Thanks for the information. My attorney doesn't seem to be concerned, especially if for the means test they take our other vehicle over 5 years (it has 42 months to go), then the amount of both of them are under the allowance. I think I am reading too many articles, etc, and even though normally I am pretty level headed and calm (really - if you all knew me you would think so - ha!), I just keep thinking of "what if, what if". We got a pretty decent rate on the truck, 7.4, and really do like it. When we purchased it we figured we would drive it and our Jeep until they won't go any longer. It is funny though, when we looked at trucks late model trucks payment wise were as much if not more because our interest rate jumped up into the teens. It also seemed like our attorney felt it was in our best interests to keep it for the reasons you mentioned.

I will try and stay off the whole truck soapbox. I am hoping we can keep it, like I said our attorney doesn't think it is a problem - will know for sure after she runs all the numbers.

Thanks again. I will try and not dwell on this so much. I feel like I'm becoming a BK addict trying to find out as much as we can about everything, good, bad or somewhere in the middle. Still praying for a 7!

[mountanddo]

I thought you were filing chapter 13 Basketbears which is why you bought the truck in the first place. I'm confused.

[basketsbears]

I thought you were filing chapter 13 Basketbears which is why you bought the truck in the first place. I'm confused.

Attorney is running both ways also with husband filing alone. Hoping for 7, probably a 13. We will know in a couple of weeks where we are at. As far as cars go, 13 is probably best. I'm just ready for a plan, as I am driving myself crazy.

[AngelinaCat]

Here is what would happen if you surrender the truck:

The mortgage holder will sell the truck at auction. You will be held responsible for the difference between what the truck sells for, and what you owe on the loan. The mortgage holder will then file suit against you and try to get a judgment for that amount. At any point in this process, file BK, and all of that will go away.

If you do decide to keep the truck, do NOT reaffirm the loan. Just keep making the payments on time and at the full amount. Then, if you have to surrender the truck later on, you will not held responsible for the difference.

Good luck to you.

[basketsbears]

Thank you.

[mountanddo]

Here is what would happen if you surrender the truck:

The mortgage holder will sell the truck at auction. You will be held responsible for the difference between what the truck sells for, and what you owe on the loan. The mortgage holder will then file suit against you and try to get a judgment for that amount. At any point in this process, file BK, and all of that will go away.

If you do decide to keep the truck, do NOT reaffirm the loan. Just keep making the payments on time and at the full amount. Then, if you have to surrender the truck later on, you will not held responsible for the difference.

Good luck to you.

You just bought this truck in the middle of December I believe with the intention of filing for C13 - which I understand is acceptable as pre-bk planning. I guess I wasn't following your posts closley enough because I missed the point where you started contemplating C7. Is this also acceptable as pre C7 planning?

Question about this...They got the truck with a great interest rate so I'm guessing their credit must not be trashed too much right now. If they file C7 and give up the truck will they even be able to find something at a reasonable payment after? Who would lend to someone when they bought a vehicle and then filed a few months later?

Agan, it's just hard for me to imagine that one can purchase a vehicle and sign a contract for thousands of dollars before they file BK and just walk away from it debt free or even better, keep it and get rid of all their other debt. I'm talking C7 here now not C13 because I understand the reasoning behind that.

I am not judging you or anything. I'm curious as to how this works.

[keepsmiling]

MD, in a 7, you are better off with less equity in your vehicle. So it can make sense there too, unless you have lots of extra exemptions to cover it. It also makes sense to buy it before the bk since your credit rating may stll allow for a decent interest rate.

[basketsbears]

MD-Well, we are not planning or wanting to turn it in. Our attorney said worst case scenario would be trustee would not let us keep it. We did not purchase it with intent to turn in. I have just been freaking out on "what if" syndrome. That is why in my last post I said I just need to step away. We will prob be a 13, but she is trying for a 7 first. Either way we had a 12 yr old truck that had been wrecked and needed work and we were not sure it would make it 5 years.

I'm sorry for the confusing posts, but I'm scared and confused about the whole thing not the just the truck. We want to do the right thing. It is just so very scary. We had always paid everything on time (until mortgage that got us in this mess), and thought we were on our way to be debt free. Like everyone here knows, this is very hard.

Thanks for listening to my fears everyone. I edited this as tried to post from phone and didn't make a lot of sense!

[basketsbears]

MD, in a 7, you are better off with less equity in your vehicle. So it can make sense there too, unless you have lots of extra exemptions to cover it. It also makes sense to buy it before the bk since your credit rating may stll allow for a decent interest rate.

Thank you smiling for your kindness.

[mountanddo]

That makes sense. Just trying to comprehend it all. Sounds like you don't have much to worry about Basketbears. Go take a calgon bath!

[basketsbears]

MD. Thanks I think I will. ;)