Reaffirm auto? Good, bad, ugly?

[jummbles]

Hi all -

New to the forums and this is my first post. Hoping for some real help, as I have nobody who i can discuss this with. I filled Chapter 7 in Feb 2016 and my 341 was on 3/9. I am supposed to reaffirm my auto loan (balloon) this week with my attorney, but I'm having second thoughts.

I had to roll on major negative equity from a car I could no longer afford to obtain a more affotdable payment. Can you share honest opinions?

Driving a 2015 Mini Cooper.
Payment = $465.85/mth
Term = 52 months remaining with a $10k balloon at the end (I'd just trade it in as a wash at that point)
Rate = 1.9%
Negative Equity = $18k

I haven't missed a payment, even during bankruptcy. BMW Financial will continue to report to my bureaus if I reaffirm. I keep thinking this will really help my credit. Plus the payment is affordable with a super low rate. My main issue is the negative equity.

I spoke with 722 Redemption regarding options who said that my payment would likely go up because my interest rate is so low right now.

I NEED a car for work, but have a co-signer. How difficult is it to get another vehicle if I surrender?

Thank you so much! This forum is incredible and I can't wait to start rebuilding in 24 months!

[CH-7-Mission-Accomplished]

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@jummbles wrote:
Hi all -

New to the forums and this is my first post. Hoping for some real help, as I have nobody who i can discuss this with. I filled Chapter 7 in Feb 2016 and my 341 was on 3/9. I am supposed to reaffirm my auto loan (balloon) this week with my attorney, but I'm having second thoughts.

I had to roll on major negative equity from a car I could no longer afford to obtain a more affotdable payment. Can you share honest opinions?

Driving a 2015 Mini Cooper.
Payment = $465.85/mth
Term = 52 months remaining with a $10k balloon at the end (I'd just trade it in as a wash at that point)
Rate = 1.9%
Negative Equity = $18k

I haven't missed a payment, even during bankruptcy. BMW Financial will continue to report to my bureaus if I reaffirm. I keep thinking this will really help my credit. Plus the payment is affordable with a super low rate. My main issue is the negative equity.

I spoke with 722 Redemption regarding options who said that my payment would likely go up because my interest rate is so low right now.

I NEED a car for work, but have a co-signer. How difficult is it to get another vehicle if I surrender?

Thank you so much! This forum is incredible and I can't wait to start rebuilding in 24 months!

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If you have 18K of negative equity, please do not reaffirm.  That's just crazy.  That's the full value of an inexpensive car.

Some lenders, like Capital One, will let you keep a car without reaffirming so long as you keep making payments.  I did and paid off my car because I only owed $2000 on it when I filed.

Check with your lender and find out if they will repo if you don't reaffirm.  Your best bet would be to hang onto the car for six months or so and then let them take it back when your scores are up and you can get a lower rate on a newer car.

But I would not reaffirm in any case.

[jummbles]

Thank you! I think that this makes more sense!

[jummbles]

BMWFS has already prepared the reaffirmation agreement and my attorney has it in his possession.

I assume that I'm on the radar now. How would you pose this question to the creditor?

[ezdriver]

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@jummbles wrote:
BMWFS has already prepared the reaffirmation agreement and my attorney has it in his possession.

I assume that I'm on the radar now. How would you pose this question to the creditor?

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The reaffirmation is not complete until all parties have signed it. Let your attorney know that you have changed your mind about the reaffirmation and that you will not sign it. Name the auto finance company. Most would not repossess an auto as long as the payments are being made ... but a few will.

[jummbles]

Thank you! It's BMW Financial Services. It's my 8th car with them and I've never had a late payment (if that matters). I was wondering if anybody had any experiences with them before.

Thank goodness for this site. I would have signed an affirmation for a car that's $18k upside down, thinking it was the right thing to do.

[DaveInAZ]

I" NEED a car for work, but have a co-signer. How difficult is it to get another vehicle if I surrender?"

- Do you have a co-signer on this car loan, or do you mean you have someone willing to co-sign on a new car loan? If you have someone willing to co-sign for a new car loan, stop paying on the Mini and do not reaffirm, especially with that much negative equity. With a co-signer with good credit you should easily be able to get a new loan on a new (to you) car with a decent APR. I recommend Hertz Car sales for a used rental car. I bought a 2013 Mazda 2 hatchback from them in Jan 2015 and am very happy with it. I paid only $10k for it with 35k miles, and almost a year & a half later it's still worth a bit more than I owe on it, and that's with 100% financing from a credit union, I just paid tax & title.

[jummbles]

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@DaveInAZ wrote:

I" NEED a car for work, but have a co-signer. How difficult is it to get another vehicle if I surrender?"

- Do you have a co-signer on this car loan, or do you mean you have someone willing to co-sign on a new car loan? If you have someone willing to co-sign for a new car loan, stop paying on the Mini and do not reaffirm, especially with that much negative equity. With a co-signer with good credit you should easily be able to get a new loan on a new (to you) car with a decent APR. I recommend Hertz Car sales for a used rental car. I bought a 2013 Mazda 2 hatchback from them in Jan 2015 and am very happy with it. I paid only $10k for it with 35k miles, and almost a year & a half later it's still worth a bit more than I owe on it, and that's with 100% financing from a credit union, I just paid tax & title.

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Wow!  That's great!  Thank you for that information.  That's a great deal for you!!!  I feel much better.  I have a co-signer available for the newer car loan.  My mom has a 670 FICO.  Not great, but certainly will help.   

I can definitely go into something a little older and much less expensive!  I am going to walk away from this negative equity!  Thank you!!!

[DaveInAZ]

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@jummbles wrote:

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@DaveInAZ wrote:

I" NEED a car for work, but have a co-signer. How difficult is it to get another vehicle if I surrender?"

- Do you have a co-signer on this car loan, or do you mean you have someone willing to co-sign on a new car loan? If you have someone willing to co-sign for a new car loan, stop paying on the Mini and do not reaffirm, especially with that much negative equity. With a co-signer with good credit you should easily be able to get a new loan on a new (to you) car with a decent APR. I recommend Hertz Car sales for a used rental car. I bought a 2013 Mazda 2 hatchback from them in Jan 2015 and am very happy with it. I paid only $10k for it with 35k miles, and almost a year & a half later it's still worth a bit more than I owe on it, and that's with 100% financing from a credit union, I just paid tax & title.

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Wow!  That's great!  Thank you for that information.  That's a great deal for you!!!  I feel much better.  I have a co-signer available for the newer car loan.  My mom has a 670 FICO.  Not great, but certainly will help.   

I can definitely go into something a little older and much less expensive!  I am going to walk away from this negative equity!  Thank you!!!

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Yeah, I think that's the much smarter move. And the reason I said stop paying on the Mimi is because it's just throwing away money, and it won't affect your credit. Once you filed they can't report any late payments because the loan is under the jurisdiction of the BK court and they can't make any attempt to collect, and reporting late is an attempt to make you pay. And with your 341 meeting last week you should have your discharge in early May and they won't have time to try to repo before your discharge. After your discharge apply for a new car loan with your mom, and when you have your new (to you car) call BMW and tell them you want to surrender the car.

[TRC_WA]

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@jummbles wrote:


Driving a 2015 Mini Cooper.
Payment = $465.85/mth
Term = 52 months remaining with a $10k balloon at the end (I'd just trade it in as a wash at that point)
Rate = 1.9%
Negative Equity = $18k

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How is it possible to be $18k upside down on a 1 year old vehicle that retails for $20-$30k with a rate like that?