Update on Negotiating With Car Lender - what now?

[leonel9]

I think I'm just going to file a Motion to Redeem and either just put what it is worth (the $4,000) or a little less, if I'm feeling ballsy.

If you don't submit it for $1, do as Justbroke mentioned, and make sure to include the cost of repairs. In my case, I started with NADA clean retail and noted the following damage:
Bumper bent,multiple scratches, pit in windshield, scuffed up rims. I then went to Maaco and got an estimate for bumper damage and painting. They estimated $2,100. Then provided an estimate for the windshield repair and bumper scrapes.

When over and done with, it knocked $2,500 off the value. Would I spend that much to paint/repair my car? Probably not, but it established the cost to bring the vehicle to clean retail/salesfloor quality. Using clean retail value is the expectation in my jurisdiction, not auction value (I wish it were auction value).

Without estimates, it's a guessing game about what the vehicle is actually worth. Of course, you could also pay $100 for an auto appraisal.

[MaggieMay]

Thanks for the replies, Leone19 and justbroke. I owe $6,000 on it and it's worth (according to Kelley Blue Book which has been used in my district as a valid valuation) about $4,000 clean retail based on age, mileage and condition, etc.

I think I'm just going to file a Motion to Redeem and either just put what it is worth (the $4,000) or a little less, if I'm feeling ballsy.

[justbroke]

I suppose at this point, I will file a motion to redeem and see what KeyBank does. Hopefully it will all work out.

I wrote that you should file a redemption motion for $1 just to drive them crazy. Maybe they'll not even respond, if your court allows "negative" noticing. There is no way to tell what they will do. You may want to actually put the current (auction) value or the value used by your district. My district uses Black Book good condition but auction price (not clean retail). They figure that the car would be auctioned so it should be the auction price. This differs by district so you'll have to figure out what they do in your district.

Don't forget to take whatever value and deduct things that are wrong (bald tires, needs new battery, dents, etc).

If you move for a $1 redemption, and the car is worth much more, your judge may schedule a hearing to determine the value.

Yes. I mentioned the $1 to get the bank's attention. This would likely go to a hearing anyhow because banks are usually not pushovers.

[leonel9]

Just curious -- what is the retail value (KBB, NADA, etc.) of this car? And what repairs are necessary to bring it to that value?

If you move for a $1 redemption, and the car is worth much more, your judge may schedule a hearing to determine the value.

[MaggieMay]

Thanks for the reply, justbroke. Yes, I remember you saying that you ended up redeeming your car for something like $11,000 less than what you owed on it.

The lender for my car loan is not a credit union, it's KeyBank.

Why would I surrender it and keep paying? Well, I was thinking of it as a retain a pay, like someone who wants to be off the hook on their house but doesn't actually want the bank to foreclose on them. (In my case, I *do* want my lender to foreclose on me!). I could surrender it, but continue to pay so that I have a vehicle. I don't want them to repossess it and then have to go get another car, which most likely means another car loan, etc. Part of my goal for this bankruptcy was to be debt-free when I was done. I came so close on my own, down to just my house and my car, but bankruptcy was the only way to stop the USDA from garnishing my tax refunds, etc.

I suppose at this point, I will file a motion to redeem and see what KeyBank does. Hopefully it will all work out.

Thanks again for the response!

[justbroke]

So, I called her bluff a little and told her that if they couldn't lower the payoff amount for me right now, that I was just going to have to surrender the car through the bankruptcy. I asked her if they would negotiate with me then. She said "It depends. It depends on if they think it will be worth their time and money to come get it and auction it off." Meaning, I could possibly surrender it and they might not come and get it, even if I don't make payments? Does that ever happen?

In some cases this has happened. It happens often enough that there are people that have gone back to the bankruptcy court to attempt to force the lender to take action. You can't force a secured creditor to exercise their rights under the contract. Since it's a credit union, you could force their hand by parking it in the lot and mailing them the keys. It's a bit extreme, but what else can you do. (BTW, I'm not suggesting that you do that because there are just a bunch of factors to make sure that works.)

So, I guess I'm just not really sure what to do about the car. Do I file a motion to redeem it? Ugh. So much time and energy. Do I surrender and just keep paying until it's paid off (almost $6,000) or surrender it, not make payments and see if they come and take it?

File a Motion to Redeem for $1. The court is always the best way to have finality. If they really don't want the vehicle, you'll get it for $1 and the cost of all the postage and service. Make sure you serve this motion correctly! Why would you surrender and keep paying? It would be discharged if you do not reaffirm the debt. Whether they come to get it is anyone's guess. I like the idea of talking to someone and bringing it to their parking lot. But, you would need to make sure that they actually take possession of it. Then you're stuck with things like your plates, registration, insurance, etc.

So confused though, that after all that work we did in that conversation, that none of it was recorded on my account.

That is one downside with speaking to someone without the authority to modify a contract.

What would you all do in this situation?

I redeemed my vehicle. I filed a Motion to Redeem as a "first day" motion. A little haggling occurred, but before the evidentiary hearing, the lender conceded to a price lower than what I requested.

[MaggieMay]

So, I called my car lender last week, told them I had filed for bankruptcy and rather than file a motion to redeem the car and all of that, that I wanted to work things out through them, get my loan balance lowered to fair market value, get signatures on everything for the new terms and then when I go into my 341 meeting, I can tell the trustee that I am doing a "retain and pay" - continue to make payments on it and keep it. Then as soon as possible, just pay it off in one lump sum.

Things went swimmingly. The woman I spoke with wasn't really sure of how it all worked, so she put me on hold several times to speak with a supervisor and by the end of the conversation, she said that she had e-mailed their bankruptcy department (and confirmed that they received it) with the figure she and I had agreed upon and they would decide if they would go with that or if they wanted to negotiate more. Either way, she said I would hear from them, but I could call on Tuesday or Wednesday of this week to check in.

So, I called this morning, and the woman I spoke with had NO idea what I was talking about. Pulled up my file, it said I called to let them know I was in bankruptcy and that's it. No mention whatsoever about ANY of the negotiating, about lowering the payoff amount, about the email she sent to the bk dept. Nothing. And the woman said "I don't know who you spoke with, but we don't do that." She went on to explain that they never discuss payment terms at ALL with someone in a bankrupty because it could be construed as them trying to collect a debt which would be in violation of the automatic stay. Also, she said that they are not in the practice of lowering any payment or pay off amounts on accounts that aren't charged off. She kept saying that and I kept asking her what it meant and she was very confusing. So I googled it real quick while we were still talking. A charged off account is basically an account where the lender feels they will probably never get their money for one reason or another. In a situation like that, they might negotiate but I am current on my payments. It was deja vu all over again, with the house - house lenders won't even talk to you about anything until you're in default on your mortgage. As long as you're making payments, why would they? It's only when they are at risk of you NOT making payments that they talk to you.

So, I called her bluff a little and told her that if they couldn't lower the payoff amount for me right now, that I was just going to have to surrender the car through the bankruptcy. I asked her if they would negotiate with me then. She said "It depends. It depends on if they think it will be worth their time and money to come get it and auction it off." Meaning, I could possibly surrender it and they might not come and get it, even if I don't make payments? Does that ever happen?

So, I guess I'm just not really sure what to do about the car. Do I file a motion to redeem it? Ugh. So much time and energy. Do I surrender and just keep paying until it's paid off (almost $6,000) or surrender it, not make payments and see if they come and take it?

Bear in mind that while I believe myself to be pretty smart and capable that I also have some mental health issues that cause me to become overwhelmed easily, plus I am exhausted all the time, not only from being a single mom to two teenagers, but also because I have been ill for the last month with whatever nasty viruses are making their way through my town. I am also going through a foreclosure, trying to figure out where we're going to live after this, and getting my son through the rest of his senior year while preparing for college in the fall. There is a LOT going on all at once in my life, and I can do it. I can always do it. But I need to streamline things and I need to sometimes head towards the path of least resistance.

So confused though, that after all that work we did in that conversation, that none of it was recorded on my account.

What would you all do in this situation?