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  1. #1
    Join Date
    Jan 2016
    Posts
    5

    Default Should You Keep or Surrender a Car in Bankruptcy

    My question involves bankruptcy in the state of: Illinois

    Hey, Looking to possible file Chapter 7 in the next couple months. I live in IL. I currently rent. So no house to worry about. My main question is if I should keep the car I just bought about 4 months ago or let it go in the bankruptcy. The car has balance of $14K and about 67 months left of payments. It is a 2012 Hyundai Accent with 23K miles. I looked up the Kelly Blue Book value for trade in just to get an idea what it is worth now according to them for a dealership trade-in and it said in excellent condition (Which its in) it would be worth around $8K. So I am already down $6K in value. After 4 months. I am paying a high interest rate of 23.5% based on my poor credit and low $500 down payment.

    So would you suggest I include this in my Chapter 7 or would lenders even possible let me refinance after all the rest of my debt is discharged to a lower rate? Do you think they would consider a refinance or a possible trade in given the fact they know I wouldn't be able to possible file again for another 8 years? The payment is high for me but I need to be able to drive. I just dont want to be stuck with a car that has already lost a lot of value in a short time frame with no possible refinance, if I could add it to the bankruptcy.

    Thanks for any help.

  2. #2
    Join Date
    Sep 2010
    Posts
    19,901

    Default Re: Should You Keep or Surrender a Car in Bankruptcy

    A car loan by itself would be a frivolous reason to file bankruptcy. Do you have other debts?

    You don't get the choice as to whether the car is included in the bankruptcy if it is financed. All debts must be part of the filing. You should be talking to the lawyer who is handling your bankruptcy. I suspect the real question is whether you should reaffirm the loan or let them repo the car once the stay is lifted.

    Frankly, the answer is pretty clear. You have an insane loan on that car. I don't know what scam outfit wrote you a 24% 72 month loan at twice the car's value, but it doesn't take a fiscal genious to realize that it's a bad deal.

  3. #3
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Should You Keep or Surrender a Car in Bankruptcy

    [QUOTE=johndeer;947820]

    So would you suggest I include this in my Chapter 7
    You don't have a choice. All your debts have to be listed and the car loan will be discharged.

    or would lenders even possible let me refinance after all the rest of my debt is discharged to a lower rate?
    Not a chance. The car is worth half the balance. Nobody is going to refinance for the balance.

    Do you think they would consider a refinance or a possible trade in given the fact they know I wouldn't be able to possible file again for another 8 years?
    You aren't likely to get financing on a trade in with a recent bankruptcy unless you end up with another bad deal on an overpriced car at high interest rates.

    The payment is high for me but I need to be able to drive.
    No, you don't. You can take buses like millions of other people. Or ride a bike.

    One alternative is to just stop making the payments once you have filed bankruptcy. Then you'll have several months to squirrel away some cash as the lender won't be able to take it until after the bankruptcy is discharge and may even take a few months before it comes and gets the car. By then, if you are frugal, you might have enough money for a cheap transportation car that you don't have to finance.

    Don't be in a hurry to fall into the credit trap after bankruptcy.

  4. #4
    Join Date
    Jan 2016
    Posts
    5

    Default Re: Should You Keep or Surrender a Car in Bankruptcy

    Hey,

    Thanks for the reply back. Unfortunately I do have many more debts other than the car. Medical, credit cards, pay day loans, ect. For my wife and I included. I knew it was a bad deal. I get what people are saying about using public transportation and so forth. I do as much as possible. But given the area I am at there is not much public transit readily open.

    Thanks for the advice.

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