Is voluntary repossession viable in this case?

[sccredit]

If you are dead set on getting rid of the truck, then yes you need to find a loan to pay off the balance.  

[Anonymous]

If you ultimately determine that you are going to go with voluntary repossession, do not hesitate to ask for a deficiency waiver.

While your deficiency balance looming is quite large, it is not insurmountable - many lenders, especially larger ones like Chase who have more-expensive attorneys on retainer, will consider letting you out of (waiving) at least part of your potential deficiency since they will avoid paying the repo guy, the lawyers, and the court costs to file against you for it later.  Plus they know they can auction the collateral immediately, and they know in advance that you'll hand it to them in good condition (many people begin to destroy/trash out their cars once they realize the repo man is looking for them, thereby lowering the values).  You may still end up with some thousands in potential deficiency, but that is better than $13-15K.  You can ask this over the phone, but I'd probably suggest planting yourself in an actual Chase branch in the lending office and asking to speak to a manager.  And of course, get the entire agreement in writing before you turn over the keys.

If you are leaning toward the bankruptcy option, definitely immediately seek the advice of an attorney with verifiable experience to guide you.  You haven't had the car long enough to be eligible for a cramdown on the loan under Chapter 13, so you'd have to surrender it and ask the judge to discharge the deficiency.   Bankruptcy itself does have costs and attorney's fees - structured into your plan, in Chapter 13 - so you might want to weigh those against the potential cost if you can get a deficiency waiver for at least some of the underwater amount, to see which one puts you farthest ahead in the end.  

[sarge12]

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@Anonymous wrote:

So would it be best for me to apply for a loan to attempt to get money to pay the balance? Obviously I don't want to get sued and definitely cannot afford that. 

As far as ch13, what sort of implications does that have on credit? Is it a another kind of terrible item to have on your credit? 

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Ch 13 is along with Ch 7, one of the two major forms of personal bankruptcy. Ch.13 is a major neg on your CR for 7 years but declines in effect over time. Bk is meant to be a fresh start. Many on this forum have filed Ch 7 or Ch 13 and successfuly rebuilt to have decent credit scores a few years after filing. I filed when I was younger and my scores today are over 800. While I greatly regret my irresponsible behavior that was the cause of me having to file, I have never regretted the filing itself. I was in so deep, I do not believe I could have ever gotten straightened out without filing!

[Appleman]

I can imagine what a 'cramdown' is related to a loan but have never heard the term before. At what point in the loan would that option be available?

Learn something everyday.

[StartingOver10]

Cramdown time restrictions 910 days of ownership (about 2.5 years)

For more info on cramdowns: http://www.nolo.com/legal-encyclopedia/cramdowns-chapter-13-bankruptcy.html

[Anonymous]

Cramdown is provided for under Chapter 13 for secured loans - except the primary residence mortgage (homestead).

It causes the principal balance on the loan to be reduced to match the current actual (market or appraised) value of the collateral.

The interest rates are of course governed by similar reduction rules under bankruptcy, so in the end it can greatly lower a monthly payment and even potentially extend the loan term, because the payments are made under the Chapter 13 plan.

For cars, as the prior poster noted, you have to own it for 30 months (910 days, 2.49 years) before you file your Ch13 petition.

For any other (non-homestead) property, it's a year pre-petition.

Being too new for cramdown, OP's option under Ch13 BK would be to surrender the vehicle, and the deifciency would be aligned with his other unsecured debts to be handled through his plan, with the remainder if any discharged at the end.

[Anonymous]

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@Anonymous wrote:

If you ultimately determine that you are going to go with voluntary repossession, do not hesitate to ask for a deficiency waiver.

While your deficiency balance looming is quite large, it is not insurmountable - many lenders, especially larger ones like Chase who have more-expensive attorneys on retainer, will consider letting you out of (waiving) at least part of your potential deficiency since they will avoid paying the repo guy, the lawyers, and the court costs to file against you for it later.  Plus they know they can auction the collateral immediately, and they know in advance that you'll hand it to them in good condition (many people begin to destroy/trash out their cars once they realize the repo man is looking for them, thereby lowering the values).  You may still end up with some thousands in potential deficiency, but that is better than $13-15K.  You can ask this over the phone, but I'd probably suggest planting yourself in an actual Chase branch in the lending office and asking to speak to a manager.  And of course, get the entire agreement in writing before you turn over the keys.

If you are leaning toward the bankruptcy option, definitely immediately seek the advice of an attorney with verifiable experience to guide you.  You haven't had the car long enough to be eligible for a cramdown on the loan under Chapter 13, so you'd have to surrender it and ask the judge to discharge the deficiency.   Bankruptcy itself does have costs and attorney's fees - structured into your plan, in Chapter 13 - so you might want to weigh those against the potential cost if you can get a deficiency waiver for at least some of the underwater amount, to see which one puts you farthest ahead in the end.  

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Wow, so speaking to someone at the branch might potentially mitigate some of the negative balance? Or stop addition balance from being tacked on? The truck is still in flawless condition. I haven't abused it in anyway. The nearest branch is 250 miles away so that's a little bit inconvenient but I'll do what I have to if need be.  

Would it even be worth it to try to speak to someone over the phone and discuss this possibility? And if I do get them to agree to the deficiency waiver, does that mean that I in effect "pay off" the loan because they will auction the vehicle and I pay the remaining balance, so it's not as large of an impact on my credit score or is it still voluntary repossession at it's core? 

[StartingOver10]

It is still a voluntary repo and any time the lender auctions off the vehicle you get substantially less than the value so the deficiency increases. 

I would call Chase first.  Most of their branches now have very few staff and even the branch managers are powerless to do anything.  Not like it was even a few years ago where they had personnel in the branches to help consumers. 

[Appleman]

Thanks for the information everyone. Informative post. Hopefully the OP will find a reasonable outcome.