Vehicle re-affirmation or 722 negotiation (trainwreak)

[enari]

So... It's time to try to keep my vehicle... or at least make an attempt. I want to try a re-affirmation first, but a redemption if necessary - or - possible...


To re-cap: I am disabled and my only income is SSDI.
rent consumes 44% of my income,
utilities another 12%,
medical around 26%
my vehicle is 14% and
insurance is: 7%.

putting me in debt every month, not to mention, food or household expenses.

I want to drop my vehicle almost in half... and then look at dropping the insurance too, once full coverage isn't necessary. I know if i can't do this, I lose the car.

I'm only looking to keep the car because a) I don't forsee an ability to get another one and b)I use it for medical transportation who are out of the local area. A taxi /bus/train won't work.

So... before I first filed, I spoke with the Bankruptcy clinic and was told that I could probably reaffirm my car for less than a quarter of what I am currently paying, and if that didn't work, just reaffirm it at my current rate and I wouldn't lose it.

To try to keep my car at 14% is not only insanity, it is impossible, and I don't need a judge to tell me that. The question is, if the car really isn't worth all that much, and it would cost more to repair and sell it, than I owe on it (or so it appears to me)... is this possible or even feasible?


here's some info below...


~~~
So the car's kbb value would be around $5k... for an excellent car.
I officially owe, around $3,400...

My car is in poor condition - mechanically solid, (as in it runs), but poor condition.
some of the hilights:
* over 140k worth of miles
* about $2300 of superficial body damage
* over $1500 of superficial mechanical issues

By superficial, I mean: dents in bumper, keyed passenger side, scraped up driver side, rust, even from scratches when i bought it, couple holes in interior... no gaping holes or smashed places...

Mechanically, it needs new tires, that cruise control doesn't work, the trunk doesn't pop open, the brake line very slowly leaks, no radio, no lighter (not the fuse), stuff like that...

Thing is, it runs, and well... minus more defective things that are just details to me... personality, if you will. =)

~~~~
Thanks

V

ps... i guess it may matter: my current payments are $180, i would need to, minimally, drop them down to $100 or less, to keep the car and the shorter the time, the better!

[justbroke]

A 722 Redemption (loan) is not always the magic pill that will cure your ills. The interest rates are usually prohibitive (as high as 24.99%) and you may actually end up with a higher monthly payment. The 722 Redemption does work in some cases. Cases where you can actually pay cash for the car and not go through a lender.

As for re-affirmation, it's touch to tell someone to reaffirm a car on which you have a $3,400 balance and so many mechanical issue. To me, the $5K KBB is a value of about $1,200 (given the damage and issues that you claim).

So... before I first filed, I spoke with the Bankruptcy clinic and was told that I could probably reaffirm my car for less than a quarter of what I am currently paying, and if that didn't work, just reaffirm it at my current rate and I wouldn't lose it.

I don't know why someone told you that you could re-affirm at a lower balance. Re-affirmation means, literally, to keep the debt as is. The only way to pay current market value is to Redeem. Perhaps you meant "redeem my car for less than a quarter of what I am...". In any event, if you're looking at a redemption loan, note what I wrote earlier... the interest rates are generally high.

I don't really see a financially smart way to keep the car. But that's just me. Others will chime in with their opinion.

[enari]

I guess the thing about the Bankruptcy Assistance Desk... is sometimes you get what you pay for. =)

On the form B8, I selected "reaffirm" which is what she suggested, along with the possibility of negotiating for $50 monthly payments... and when we spoke on Thursday, she said to just take photos and estimates and call the loan company and see what I could get..

but...damn...as I am writing this... i remember something... she told me to wait on filing the B8 until I saw what the loan company would do... and y'know what? I never filed it. I remember reading the flow-chat saying it had to be done within 45 days.

It may just be out of my hands. No use worrying at midnight on Saturday... I'll do what I can on Monday...

oh - and my auto loan - I believe I signed it at 18%, several years ago. 0=)

[enari]

Alright...

I have put together several different estimates, and have decided to attempt to redeem the vehicle. Once I finished getting the body work and mechanical estimates, plus pictures, itemized details of the problems, there's very, very little value in the car left.

I was going to offer to re-negotiate the loan amount as part of the reaffirmation, including my documentation, and if that fails go the redemption route. However, it seems rather silly to re-affirm the car for an amount I could reasonably pay off in a few months, so I may just do the straight redemption.

I guess, I am posting again, because I'm not sure if I should speak with the lender and attempt to negotiate before filing for the redemption or afterwards.

I'm still reading and researching the paperwork necessary. Any suggestions?

enari

~~~
edited to add: I just saw that I need to contact them and attempt for the consent order of redemption and then move on to a motion if necessary & request the hearing.

So I will file my statement of Intent tomorrow... maybe i need to request an extension as well?
and then attempt for the consent order of redemption before moving forward. =)

[enari]

Last Monday, I spoke with the lender, who informed me they would 'most probably object', so this is not a 'consent order'

then I filed my motion and mailed the motion,notice,etc to both the lender and the trustee.

My hearing is in a few short days, so today, I sat in the courthouse and observed proceedings.

I waited for a few hours, but was unable to meet with the bankruptcy helpdesk, but i read alot of cases and hearings, and I guess I have a few final questions:

1. My proposed redemption amount if different from what is on my schedule D as the value of the vehicle. At the time of my filing, I did a quick kbb lookup of the possible value of the car. In the redemption motion, I have the NADA clean wholesale value & the deductions for mileage, body and mechanical work, and the results were significantly (60%) less and my intial estimate. (why i decided to redeem)

Do I need to amend the Schedule D to reflect the price on my motion to redeem?

2. When I attempted to negotiate with the lender, they stated that irregardless of the issues with the vehicle it was my duty to maintain it in excellent condition, and that they would consider nothing lower the full amount of the loan.

I'm assuming this is just the standard 'replacement value' vs. "wholesale" value stance, but subtracting substancial repairs from 'clean retail' is how i received my number. 11 USC 506(a) ... however without the amendment, I'm not sure if the lender will try to hold me to my original valuation, and if the repairs can really be subtracted, even though most cases seem to say so.

So... do I need to amend my Schedule D, or prepare a different type of argument, assuming the lender objects?

[justbroke]

1. My proposed redemption amount if different from what is on my schedule D as the value of the vehicle. At the time of my filing, I did a quick kbb lookup of the possible value of the car. In the redemption motion, I have the NADA clean wholesale value & the deductions for mileage, body and mechanical work, and the results were significantly (60%) less and my intial estimate. (why i decided to redeem)

Do I need to amend the Schedule D to reflect the price on my motion to redeem?

Not unless the creditor or court makes an attack on that number there. If so, just amend it later.

2. When I attempted to negotiate with the lender, they stated that irregardless of the issues with the vehicle it was my duty to maintain it in excellent condition, and that they would consider nothing lower the full amount of the loan.

Wow, they are crazy. Anyhow, it reads as though they want you to REAFFIRM at the current value. You checked REAFFIRM on the forms. I don't see why they are wrong asking you to do what you said. You could change it to Redeem but you'd have to "pay" the redemption value (by getting a new loan or paying cash).

I'm assuming this is just the standard 'replacement value' vs. "wholesale" value stance, but subtracting substancial repairs from 'clean retail' is how i received my number. 11 USC 506(a) ... however without the amendment, I'm not sure if the lender will try to hold me to my original valuation, and if the repairs can really be subtracted, even though most cases seem to say so.

No, this isn't that question. You stated you wanted to REAFFIRM, but clearly are trying to value their lien. You can't do that without paying the Redemption value.

So... do I need to amend my Schedule D, or prepare a different type of argument, assuming the lender objects?

Won't matter... the argument is different. The lender is basically right. You asked to REAFFIRM the loan, and now you're trying to value it under 11 USC 506. If you can value it, and it is not a so-called 910-Vehicle, then you'd have to pay the value in order to "Redeem" it.

You have paperwork issues.

[enari]

Oh - I'm sorry, I was not clear.

My initial post mentioned REAFFIRM, but after listening here, and getting estimates for the vehicle, I filed a Statement of Intent to REDEEM the vehicle. I then spoke with the lender and then filed my Motion to Redeem & all the other documents with the court. My hearing is later this week.

I realized, after posting here, and getting estimates, that, the condition the vehicle is in, and the status of my income, I could not afford to risk committing myself and income to a vehicle of questionable stability. Instead I am attempting to redeem. If it fails, I would have lost the vehicle anyway, but, as it says somewhere... (paraphrased)

The value of me having this property is worth more to me than the value it could reasonably be sold for... I'd rather risk the vehicle I know, than purchase a different one for the same price. If not, I'm going to be in the same position, same income, trying a different vehicle of the same quality.

edited to add: The initial statement of intent, the one I had selected "reaffirm" in (and posted about?), I miraculously never submitted, I remember being told to not file it immediately, and I actually never filed it. I filed my only statement of intent, a few days prior to the deadline, and my motion a few days later. So, the court only has one statement of intent. =)

[justbroke]

How do you intend to redeem this vehicle? Is it a 910-vehicle? For your evidentiary hearing, I'd bring in pictures and some sort of "estimate" from a car place like CarMax indicating that the value is lower than the book value.

[enari]

It's a 722 vehicle, I believe... I'm Chapter 7.

I filed my motion, and am waiting for the hearing. I sat in a courtroom today, to learn more about the proceedings, and had hoped to follow up at the assistance desk, but they were booked for the day. So my motion is being heard in a few days & as of yet, the lender hasn't filed an objection.

In reviewing my paperwork, and reading case opinions to try to learn more, I realized my Schedule D, reflected what I initially thought the vehicle was worth, and not the replacement value listed in the motion.

I took the vehicle to two body shops and a mechanic, plus copies of prior work estimates, and the repairs I have made. I took the current 'clean retail' value of the vehicle and subtracted the body work and mechanical repairs. I added pictures and line-item repair details. I have attempted to find a place to do an estate appraisal, but it is way beyond my means & this is more research than I have seen.

The loan company responded with their statement that I had not met my duty to maintain the vehicle in excellent condition and they would probably file an objection, unless I were to pay the full loan amount.
I assumed that was a scare tactic.

So..that's what I have. I also had the motion and details reviewed at the bankruptcy helpdesk & minus a few small word changes, he said it looked good.

I'm just worried about the Schedule D and wondering what the next step is.

[justbroke]

The loan company responded with their statement that I had not met my duty to maintain the vehicle in excellent condition and they would probably file an objection, unless I were to pay the full loan amount. I assumed that was a scare tactic.

Not a scare tactic, because you're already in Bankruptcy. They are just being open about their position. In any court proceeding, most want to avoid litigation. This is why attorneys often "telegraph" out outright inform the other attorney what they are thinking about doing.

I'm just worried about the Schedule D and wondering what the next step is.

I'm worried that you still haven't indicated how you're paying for this Redeemed value? You must have cash or a lender who is willing to lend you the money to Redeem the vehicle. Do you have that arranged?

I would not worry about Schedule D at this time. There's an explanation should the lender show at the Redemption hearing. You may want to bring the updated Schedule D with you the date of the hearing.

[enari]

I'm worried that you still haven't indicated how you're paying for this Redeemed value? You must have cash or a lender who is willing to lend you the money to Redeem the vehicle. Do you have that arranged?

Yes, I do! The vehicle is not worth very much, nor is what I would be able to afford, so I've made an arrangement with two family members to help me purchase it outright. Both of them are very reliable and have the finances available to aid me. I wrote in the motion that funds would be available within 7 days of the order.

Then, by dropping the insurance to minimum coverage plus a little extra, I will be able to repay them and move that income into savings/repairs fund. If it can last longer than 6 months, I should be ok.

If I cannot redeem the car, I will use their assistance to purchase a running vehicle outright, and do the same thing. I'd just rather the one I have with it's known problems.

[justbroke]

Okay, I was just making sure that you have planned this out, and it reads as though you have! Best of luck on your redemption hearing!

[enari]

Thanks!

I really appreciate your comments. Forewarned is forearmed and I'd rather have to defend a decision here then in court!

I will bring an updated Schedule D, or at least some copies of it, so I can run to the library and print if needed. I 'wish' I had more time, so I could sit in court longer, watch more proceedings and reduce some of the anxiety, but I will have to just let things be.

I assume then, based on what the Lender determines, and it really would be a greater loss for them to file, I assume based on their response, which I may or may not know prior to the hearing, the Judge will then determine if a valuation is necessary, or just grant/dismiss the motion.

Anyway, I'll take a deep breath, try not to over-think it, and, like I said, I'd rather test out my thoughts here, than before the Judge! =D

[enari]

An objection was filed, basically that the balance and loan date on my motion was incorrect, and that my estimates do not count as appraisals, and that the redemption value is clean retail, which is greater than the secured creditor amount.

The balance I used was provided to me by the lender in a written document.
The redemption value, obviously is why we're here, and I can argue most of that.

my concern is, how important is my listing of the incorrect loan date? Does that become part of my response, or do I need to amend the motion?

[justbroke]

An objection was filed, basically that the balance and loan date on my motion was incorrect, and that my estimates do not count as appraisals, and that the redemption value is clean retail, which is greater than the secured creditor amount.

Well if it's "your" estimate and not from an expert who does appraise vehicles, then they will use your assessment as insufficient.

my concern is, how important is my listing of the incorrect loan date? Does that become part of my response, or do I need to amend the motion?

You should amend your Motion.