PENFED response to BK

[Anonymous]

Even if your burning them on the cc/personal loan, it won’t affect the auto interest rates. 

[azfitz11]

Thanks for the info. Takes a lot off my chest. 

[pizza1]

Just something else to think about when filing a BK7...you may "want" to keep both of your cars, but the trustee may only let you keep one of them. A lot of times in a BK7, 2 cars is deemed a luxury. So, be prepared that might happen.

[azfitz11]

Ya, I was thinking about that. 

[Anonymous]

Read your loan agreement.  Usually the answer is “no,” but in the case it is “yes” you’ll want your lawyer to know so that arrangements can be made with the judge to fix the rate.

[Anonymous]

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@azfitz11wrote:

Even if i'm burning them on a credit card and personal loan?

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@Anonymouswrote:

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@azfitz11wrote:

I'm most interested in what will happen with my 2 vehicles. Will they or can they raise the interest rate?

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No they can't and won't raise the interest rate on the auto loans.

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Correct, even if you are burning them on the cards. Your interest rate will stay where it is.

[Anonymous]

I was in the same boat you are, had two vehicles and a CC with Penfed. After my meeting with creditors, I was able to keep both vehicles (reaffirm) and they closed my both of my CC's. Interestingly I still have the ability to use my checking and savings which I was sure they would close. Speaking with PenFed support I saw nothing to indicate for me that I would be unable to use them going forward. I'm still weary and will wait before I start moving any money in them for now. Still, Its nice to see myself being able to hold on to them. Unless someone thinks otherwise and says I should move on?

[Anonymous]

I was told that I could keep the loan and assume current interest rates. In may 13 my interest was crammed and I only owe the current value and my interest went from 15% to 5%. I financed the car in 14 and it was 2 years old then.

[Anonymous]

I'm slightly concerned that there hasn't been a response to Scupra's comment about cross-collateralization. It makes sense that PenFed wouldn't increase your interest rate simply for filing bankruptcy. They have a loan agreement with you, and if that is not a feature of the loan, PenFed couldn't arbitrarily increase the rate.

If the loan contains a cross-collateralization clause, then you would be effectively agreeing to  not ever receive the title for your auto loan, after it is paid off, while you are in bad standing on other debt with them (such as a charged-off credit card). In other words, your vehicle will be used as collateral on other debt you incur with them (i.e. your credit card). Hence it is a "cross-collateralization" clause. 

I don't know if PenFed has this clause in its loan agreements or not. But be sure to read the terms of your loan before you reaffirm it and later find out you can't get the title for your paid-off loan.

Also, does reaffirmation make sense for you? Often it does not. If you are upside down on one or both vehicles, you are effectively saying, "I have an opportunity to discharge this negative equity, or start out with a new vehicle altogether, or redeem the vehicle for what it is worth, but I choose to reaffirm this loan, at the same rate, and be negatively impacted if I miss a payment or the car is totaled and I'm upside down."

I would for sure speak with an attorney and discuss if retain and pay is an option ... or if there is a better option than reaffirmation that is in your best interest.