new truck

[inSOdeep]

What is the name of your state?Oklahoma

I went yesterday and traded in my truck with the same finance company that I had on my existing truck. I only had 5 months left to pay on it. I figured since I was filing BK that 5 mos from now, I wouldn't have anything else to build my credit up, so I traded it in and kept my payments the same, got a newer truck with WAY less miles, and only have a 2 year note with 9.9% interest. I figured this was smarter than getting a 21% interest rate when trying to get another one later.....Was this a really dumb move?

 

[bigun]

Depends on how much equity you have in the truck? Here's OK. bk exemptions.
http://www.bankruptcyaction.com/okexemptions.htm

From a dollars and cents point of view, it wasn't a good move. You extended the financing by 19 months on a depreciating asset. Forgwt about the payment or the interest rate. You borrowed more money and will be paying longer on something that will depreciate. Never borrow money just to improve your credit score and never borrow money to finance a vechicle unless, you really need one. And finally, never base your financing on a monthly payment.

 

[JETX]

Was this a really dumb move?

In my opinion, yep. Say goodbye to your new truck... unless you are willing to reaffirm it and exempt it from your bankruptcy.... thereby negating your attempt to 'scam' the creditors and court.

 

[markf2145]

I think I understand the OP's intentions as, quite frankly, I have been considering the same thing before my filing. The thought process is this, you have an older vehicle and it will by nature not last forever, or possibly not without continual repairs during the 2-3 years it may take to rebuild your credit to not be seen as such a risk. With that in mind if you were to get a new(er) vehicle, that you can actually afford to pay for, before filing you are able to reaffirm that loan and continue on with the original terms of the loan (CH 7). In essence I believe this is good planning when contemplating bk, this would allow you to get the vehicle you want/need and reaffirm the loan to keep it and you payments would help rebuild your credit afterwards. As a side note, wouldn’t a vehicle payment, one that is possibly larger than your original one, help reduce your "disposable income". As long as the debtor were to reaffirm the loan and pay as agreed, I personally don’t see a down side to this... but then again in now way am I an expert. Anyone else’s thoughts ??

 

[racer72]

When you are forced to reaffirm to keep the truck, don't be surprised if the interest rate jumps up to somewhere in the mid 20's.

 

[jwdantsr]

confused

When you are forced to reaffirm to keep the truck, don't be surprised if the interest rate jumps up to somewhere in the mid 20's.

I was under the impression when you REAFFIRMED you were simply agreeing to the terms of the original contract and were not including the property in the bankruptcy.

 

[racer72]

I was under the impression when you REAFFIRMED you were simply agreeing to the terms of the original contract and were not including the property in the bankruptcy.

In a way you are. But you are now considered a high credit risk and most loan agreements contain language that allows the creditor to raise the interest rate if you do not maintain good credit. And many large creditors won't even bother with reaffirmation when bankruptcy in involved in fairly new contracts, they will just repossess the vehicle. Ford Credit is known to repossess rather quickly and will not reaffirm.

 

[JETX]

One potentially HUGE thing you seem to have overlooked.... an affirmation of a debt requires the approval and acceptance of both the debtor AND the creditor. Without the lenders agreement, your debt will NOT be waived.

 

[Ladynred]

I would have to agree with Mark, getting a newer vehicle prior to filing for BK is a common occurrence and is reasonable IF your current vehicle isn't likely to last while you rebuild your credit. Getting a car loan post-bankruptcy is not hard, but the interest rates are ludicrous, so why not get a newer one while you still can ??

Racer, are you sure they can up the intereset rate on a written contract ?? It was my understanding that they can't do that on a closed-ended contract. It was also my understanding that in a reaffirmation there is some leeway for negotiation to be sure you DON"T get screwed over. I do know one other thing not mentioned here though, with a reaffirmation you will most likely get the shaft from your insurance company when they raise your rates.

One other thing - reaffirmations are NOT required in OK to keep secured property. So, you do not HAVE to reaffirm, as long as you keep paying, you can keep the vehicle. If something happens that you can't do that, you walk away w/o any liability as the debt will be discharged w/o a reaff.

 

[jwdantsr]

checked my loan docs

I purchased a new truck in Apr 2003, filed BK7 earlier this month. I found my loan documents yesterday and according to the "fine print" on the docs:
"6. DEFAULT: You will be in default if.......You file a bankruptcy petition or one is filed against You;....."

NOW I'm worried!! I've been paying on this truck since June '03 with no missed payments. Anyone have any experience with BK7 and Chrysler Financial?? I am reaffirming the truck, btw.

 

[Ladynred]

If you've been keeping up payments for over a year and they haven't moved to take it back, what are you worried about NOW ?? You can't reaffirm now, your BK case is closed. Look, the bank doesn't want the car, they want the MONEY - as long as they get that, they should be happy as pigs in slop and leave you alone. If you didn't reaffirm, they can't even touch you if you DO miss payments, the debt was discharged - they can't collect a discharged debt.

 

[jwdantsr]

Forgive me...

If you've been keeping up payments for over a year and they haven't moved to take it back, what are you worried about NOW ?? You can't reaffirm now, your BK case is closed. Look, the bank doesn't want the car, they want the MONEY - as long as they get that, they should be happy as pigs in slop and leave you alone. If you didn't reaffirm, they can't even touch you if you DO miss payments, the debt was discharged - they can't collect a discharged debt.

I'm sorry, maybe I didn't make myself plain enough. I just filed BK7 on Oct. 6; 341 scheduled for Nov. 12. According to the contract I am currently in default because I filed BK7. Can and will Chrysler Financial excercise their right (if they have that right) to repossess my truck even though I have missed no payments and been on time with all payments since I've had the truck.

 

[LdiJ]

When you are forced to reaffirm to keep the truck, don't be surprised if the interest rate jumps up to somewhere in the mid 20's.

As long as the payments continue to be made on time the interest rate cannot increase.

 

[JETX]

As long as the payments continue to be made on time the interest rate cannot increase.

And of course, that is not necessarily true. Lots of lender agreements, especially sub-prime ones as this probably was due to his prior credit history (to precipitate bankruptcy filing) allow for the creditor to monitor the debtors history and change rates if the risk changes.