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A couple of pre-bankruptcy questions

New Member

A couple of pre-bankruptcy questions

Hi, I'm most likely filing Chapter 7 later this month. I met with an attorney last week.

 

I hope it's okay to ask you all a couple of questions! I've lurked around here for weeks before seeing the attorney, and I read a couple of books on things. I learned just enough to confuse me, haha.bout 

 

I have probably 23 credit cards (store cards) with a zero balance. Do I need to close these out myself prior to officially filing? (My attorney said he would just include them, but I wondered if it made more sense for me to close them.) Will it make any difference in the long run as far as my credit report goes? (such as, does it look better to see "closed by customer" instead of "closed by guantor" or however they word that?

 

I have three (yes three) personal loans that were secured with random household property. (a tv, an iPhone, etc). I'd paid on these loans for a long time but they'll be included in the bankruptcy. It's not a ton of stuff, but I worry about keeping it. The attorney said I don't have to worry, but naturally I do. Anyone have info on loans such as that? (I do know that some things can come under exemptions.)

 

Lastly.... I have a craptastic loan from Exeter for my SUV. I mean, 22.99%. UGH. I've paid faithfully, on time, for over two years and have about three more to go. I plan to reaffirm as I can't be without a vehicle. I don't plan to change vehicles in the near future..BUT if I did, and got a decent loan, they'd want to roll what I owe to Exeter into that, is that correct?  There's a good chance I may just be able to pay Exeter off fully long before I need any new vehicle, which would be best I'm sure.

If I reaffirm anyone know if Exeter is known for working with you on the percentage?

 

Thanks for reading and for any advice, I truly appreciate it!

Message 1 of 17
16 REPLIES
Moderator

Re: A couple of pre-bankruptcy questions


catbite wrote:

Hi, I'm most likely filing Chapter 7 later this month. I met with an attorney last week.

 

I hope it's okay to ask you all a couple of questions! I've lurked around here for weeks before seeing the attorney, and I read a couple of books on things. I learned just enough to confuse me, haha.bout 

 

I have probably 23 credit cards (store cards) with a zero balance. Do I need to close these out myself prior to officially filing? (My attorney said he would just include them, but I wondered if it made more sense for me to close them.) Will it make any difference in the long run as far as my credit report goes? (such as, does it look better to see "closed by customer" instead of "closed by guantor" or however they word that?

 

I have three (yes three) personal loans that were secured with random household property. (a tv, an iPhone, etc). I'd paid on these loans for a long time but they'll be included in the bankruptcy. It's not a ton of stuff, but I worry about keeping it. The attorney said I don't have to worry, but naturally I do. Anyone have info on loans such as that? (I do know that some things can come under exemptions.)

 

Lastly.... I have a craptastic loan from Exeter for my SUV. I mean, 22.99%. UGH. I've paid faithfully, on time, for over two years and have about three more to go. I plan to reaffirm as I can't be without a vehicle. I don't plan to change vehicles in the near future..BUT if I did, and got a decent loan, they'd want to roll what I owe to Exeter into that, is that correct?  There's a good chance I may just be able to pay Exeter off fully long before I need any new vehicle, which would be best I'm sure.

If I reaffirm anyone know if Exeter is known for working with you on the percentage?

 

Thanks for reading and for any advice, I truly appreciate it!


Welcome to MyFICO! Smiley Happy

 

I will answer what I can and leave the rest for others.

 

IMO it is far better to close all of your zero balance credit cards prior to filing.  The reason is this:  when you close them they are closed with the history you have now and with a zero balance and no Bk notation on the tradeline (TL).  If you let the attorney do it by adding each card to the petition, the tradeline will read IIB and zero balance. The difference between the two is one is a positive TL and the other is a derogatory TL.  Positive TL's stay on your credit report for up to 10 years and the negative Bk'ed TL's drop off after 7 years.  IMO it is far better to take the benefit of all of those zero balance TL's and let them report for as long as possible.  

 

It is also possible that those same creditors will give you credit more quickly after your discharge since you didn't burn them in the Bk. 

 

As to the Exeter loan - I would dump that puppy in a heartbeat.  Why reaffirm a loan at 22.99%?  A Bk is supposed to be a fresh start. Reaffirming your car loan would not be the wise thing to do based on the info you have provided.  Take the opportunity to get rid of your debt.  If you don't reaffirm and just continue to pay and keep the vehicle until you get on your feet after your discharge, you don't have to roll in all that negative equity when you go for another vehicle. If you do reaffirm, then you are stuck with the loan. it's entirely up to you, but research first and then make your decision. If I were in your shoes, no way would I reaffirm a high-interest loan like the one you are in now. 

Message 2 of 17
Valued Member

Re: A couple of pre-bankruptcy questions

Regarding your personal(Aka collateral) loans , I am in the same boat, but the lawyer said that I would only have to worry about my items if the creditor request them. In my case, he knows for sure one of the creditors is going to come after the items listed because they have a pitbull for an attorney. Unfortunately, my TVs are pretty big (both 60in and one a 4k), but they can be replaced, so I'm not concerned. Your option regarding that is you surrender or you can keep and continue paying on the loan. I wanted everything wiped out, so I decided to surrender. After all, once everything is discharged, I will be able to get them back in a month or so. Tvs are pretty cheap right now!
Message 3 of 17
Regular Contributor

Re: A couple of pre-bankruptcy questions

It's probably also worth discussing what other options exist for your vehicle if you want to keep it:

 

1. Retain and pay. You may be able to keep the vehicle, but not be stuck with the high interest rate loan. If at some future point you want to walk away from the vehicle, you could turn it in without additional impact to your credit report.

 

2. Redeem it. If you owe more than it's worth, you may want to either redeem for fair market value (think KBB value - repair costs) using assets you own (e.g. 401(k) loan) or, you redeem it by getting another lender to get you a new loan (probably at a similar interest rate) for the actual value. 

 

There's usually not a compelling reason to reaffirm an auto loan at 23%. Is the lender offering a reduction in the interest rate or loan amount?

Message 4 of 17
New Member

Re: A couple of pre-bankruptcy questions

Thank you all for the answers so far!

 

I will definitely close out those zero balance cards today.

 

I had a Discover secured as well, and realzed I owed less than my $200 limit, so I called them to close it, and put my deposit towards my balance. They were super nice and I'm glad to not burn them in the bankruptcy.

 

Regarding the personal property loans, if any of that can fall under an exemption (such as one tv) does that exemption protect it, or would it still possiblly be claimed by the creditor?  Two of the loans I'm not really worried about, and the third I may have to see if I can continue to pay and not surrender. (that one is under $1500)  Does anyone know if those type of loans will negotiate on terms? (Personal Finance, World Finance and 1st Financial.)

 

I have one more loan, from Avant, that is not secured. Should there be any issue with that one?

 

 

 

As for the car, I still owe about $10k and the NADA value says about $10k. No contact with the lender yet as I have not officially flied (will be fliing by end of month.) I like the sound of retain and pay, but I"m scared they'll still repo (does that happen?) even though I'm paying, if I don't reaffirm. I'm the only one in my family that drives, and I have to take both my mother and daughter to a lot of medical appointments. I've heard random bad things about Exeter (such as their crappy interest rates) but no idea on how they may act once they find out you're going to bankrupt. I already had taken out a 401K loan last summer so no option to do so right now to pay off.

 

Sorry for so many questions, I've been trying to keep my head above water for a long time and am finally throwing in the towel to start over. Smarter, wiser this time.

Message 5 of 17
Valued Member

Re: A couple of pre-bankruptcy questions

From my understanding and I asked, they can not be exempt because you put the items down as collateral. After bankruptcy, there isn't a way you could repurchase the items? Don't know your situation, but since a lot of my bills are freed up and I will have extra money each month, I'm not putting up a fight about surrendering anything since the items don't hold any sentimental value and I could purchase a lot sooner than the loan that's over 30%.
Message 6 of 17
Valued Member

Re: A couple of pre-bankruptcy questions

Oh and the avant loan will not be a problem. I have a 2k one through argon that was included.
Message 7 of 17
Frequent Contributor

Re: A couple of pre-bankruptcy questions

Here's my experience with my BK and secured items (furniture). One creditor sent threatening letters that they were going to come pick up my firniture on one date, then it passed. Another threatening letter, with another date - it passed.. I just ignored them and I haven't heard anything from them 4 months post BK. If they DO call I don't plan on just giving my stuff back. Honestly, if they WANT it they can go and file a court order and get a judge, legal fees etc involved. I know they won't do it and I called their bluff.

I had a vacuum financed, and they waited till the day of my DC and caleld me wanting to "talk". I called back and left a voicemail stating to leave what they wanted on my voicemail. Luckily for me, they left a nice message threatning that they would only update my credit report to show IN BK if I continued to pay them, or I needed to make arragements for them to come get the item. I then filed a CFPB and BBB complaint against them for failure / refusal to update my credit and included that they were not following BK law by requesting me to pay before they would update my credit.

Honestly, they do have every right to ask for the stuff back- however MOST of them are just bluffing and are trying to intimidate you. Just keep records, recordings etc in the event they try to pull something like mine did.

Ch7 BK filed 7/5/16, DC 10/12/16
Message 8 of 17
New Member

Re: A couple of pre-bankruptcy questions

Thanks for the replies!

 

I could re-purchase some of the items, yes. but I STUPIDLY and I mean STUPIDLY listed my child's playstation on one of the loans. I could easily repurchase one, yes, but it wouldn't have all the game data, etc and I don't really know yet how I'd explain it to her as well.  

 

There are other items I don''t mind losing at all if they wanted them,. I would prefer to keep my Mac, which I also stupidly listed. 

 

I read a little bit aobut redeeming(?) some of the items. I don't know if you have to redeem them all, or can pick and choose, but I think I'll need to go that route maybe. Has anyone had experience with that?

 

The secured loans are really the only thing that's bothering me about the bankruptcy. In one way I start to feel excited about a new beginning, then I think about how to figure out the loans and what I'll have to do, and feel just sick.

Message 9 of 17
Valued Member

Re: A couple of pre-bankruptcy questions

Don't feel bad. I listed my kids small 32in TV and two iPads. Lost one and the other one, I'm giving the creditor mine instead of my daughters'. I also had the option to redeem and gave it some thought, but I wouldn't have all the money upfront to pay for the items, so I said forget it. But your situation I understand. What I would check into first is to see what your attorney thinks about that creditor and the history? My attorney knew this particular creditor always have their lawyer at the meeting and they always submit a claim for collateral, so it doesn't hurt to ask if he/she thinks they will show or submit anything. Be prepared just in case.
Message 10 of 17