HELP/ADVICE NEED - CHAPTER 7 AND HONDA FINANCIAL

[0REDSOX7]

Hello all,

Had to file a chapter 7 case back in October (no asset).  My wife got laid off and couldn't find work for two years and it culminated in this mess.  Anyway, here is my question.  We have two cars financed through Honda Financial.  Both of them with negative equity (and we owe more than they are worth).  We had considered surrendering them but we did not have the cash to purchase anything else, so, right now, on our statement of intentions, we put option 4, and intend to keep them and pay without re-affirming the debt.

When we filed, we asked our attorney if that it would be an issue (considered fraud), if we kept the cars current (they are) and then, when we are discharged, say, three or four months after the fact, we just surrender them to Honda and pay cash for two decent cars then.  At that point, we will have enough funds saved up and should be able to get something 1) cheaper payments (we are combined for over 950/month in two car payments) and 2) no negative equity.

Any thoughts to this?

Also, I have read that in cases where cars have extreme negative equity tied to them (as in my case), if the debtor does not re-affirm the debt, then the creditor can ask for the car back as they know eventually, the debtor can surrender the car without any type of deficiency judgement.

Any ideas?  Is this plan okay?  Is it bad?

[juggalo9er]

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@0REDSOX7 wrote:

Hello all,

Had to file a chapter 7 case back in October (no asset).  My wife got laid off and couldn't find work for two years and it culminated in this mess.  Anyway, here is my question.  We have two cars financed through Honda Financial.  Both of them with negative equity (and we owe more than they are worth).  We had considered surrendering them but we did not have the cash to purchase anything else, so, right now, on our statement of intentions, we put option 4, and intend to keep them and pay without re-affirming the debt.

When we filed, we asked our attorney if that it would be an issue (considered fraud), if we kept the cars current (they are) and then, when we are discharged, say, three or four months after the fact, we just surrender them to Honda and pay cash for two decent cars then.  At that point, we will have enough funds saved up and should be able to get something 1) cheaper payments (we are combined for over 950/month in two car payments) and 2) no negative equity.

Any thoughts to this?

Also, I have read that in cases where cars have extreme negative equity tied to them (as in my case), if the debtor does not re-affirm the debt, then the creditor can ask for the car back as they know eventually, the debtor can surrender the car without any type of deficiency judgement.

Any ideas?  Is this plan okay?  Is it bad?

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t

technically this can be done although it would not be looked favorably on. the courts allow you to add things to your bk up to one year after discharge which in an essence is what you are planning i think. it would be much simpler to keep the cars during your stay after you file and save that 950 for the 3 months (i do not believe they can take the car during the stay) and use if for a car. consult your attorney on this one. you need to keep in mind you will get a horrible interest rate out of bankruptcy if you finance a vehicle before doing some rebuilding, i was offered 19.99%.

[0REDSOX7]

We are still up in the air on what to do with this.

The car loans with honda are included in our ch. 7 and will be discharged in a month.

We think we will waiti a few months after discharge and then let Honda come and reposses them since they cannot come after us for any deficiency balances and use the money saved as down payments on cheaper vehicles.  There is/was so much negative equity in these vehicles, it makes me sick.  Can't believe I was so stupid to do it.

Oh well.

I guess, if the courts have no issues, then it's just a matter of burning AHFC. 

Our attorney said it would be okay - but risk that Honda might take our other car financed through them should we wish to keep it.  We did not re-affirm, only did option 4, and said we maintain payments on it.

I just didnt know if doing this would have any impacts on our BK filing.

[ezdriver]

You came here because you want some straight talk and recommendations. Personally, I'd let Honda take the cars when they get around to it ... and it seems that you have already convinced yourself to do that anyway. If your are so upside down on those vehicles, you are better off buying a couple of beaters every six months if you had to. I drowve a 1993 Buick Roadmaster for three years and now I own two beautiful Mercedes. Don't drive yourself crazy. Let the cars go ... and save while you wait for Honda to come pick them up. Good luck. One foot in front of the other and soon you will be well on your journey to recovery like many of us.

[0REDSOX7]

Thanks. That's what we're gonna do, just didn't know of trustee or courts would have issue since we didn't state this on the statement of intentions.

[StartingOver10]

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@0REDSOX7 wrote:
Thanks. That's what we're gonna do, just didn't know of trustee or courts would have issue since we didn't state this on the statement of intentions.

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Listen you your attorney. No issue with the courts. You included the cars in your BK petition. You stated your intention to do option 4. If Honda comes in and picks up the vehicles after your discharge the two tradelines will still read iib and zero balance. They can't change it to 'repo'. That would be the only caution I have for you, keep an eagle eye on your credit reports to make sure they don't change the reporting.

EZ is right. You have to do what is best for you. I did a similar thing, surrendered one (they came the day after my discharge to pick it up) and reaffirmed the one that was almost paid off. It is far better to get rid of the huge negative equity and take advantage of your fresh start!

[0REDSOX7]

Yeah - I think we are set on that.  Once the discharge is ordered, I'm gonna use Cap One to see if they will give me a loan to get a beater and stop paying on them and them them take them.