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What to do about car after BK

New Member

What to do about car after BK

Hello everyone!

 

I was discharged from a Chapter 7 bankruptcy about 3 weeks ago. I decided NOT to reaffirm my car in the process, which I owed about $16K on. They have not come to pick it up as I have continued to make the $370 in payments each month. I am working to rebuild my credit. I live in a modest apartment with my son (I'm a single mom) that I can comfortably stay in for the next couple of years as I rebuild. I would like to eventually purchase a home. I have been reading the forums and just applied and was approved for the Capital one platinum. My credit scores are around 540.

 

My question is this. I need a car to get to work, but I would like to not be saddled with the $370 a month car payment. Is it better to stop paying on the car and look for a cheaper car loan right now? Or should I continue making payments and save money to either buy a car outright or have a big down payment on one? I'm not sure when/if the car company (Suburu through chase) will take my car if I'm making the payments, so of course this is all "if the car doesn't get repossessed." Thank you!

Message 1 of 14
13 REPLIES
Community Leader
Valued Contributor

Re: What to do about car after BK

If you're current on the payments & continue to make the payments it is extremely unlikely Chase will repo the car. Banks prefer not to repo, especially since you didn't reaffirm the loan because that means you're no longer personally liable for the loan, all they can do is take the car. If you had reaffirmed the loan if they repo the car & sell it for less than the loan balance, which is common, they could come after you for the deficiency.

 

My recommendation is you keep making the payments for now and rebuild your credit and get your score up. If you applied for a car loan now with a credit score of 540 to buy something else you'd probably be looking at 16-20% interest or even higher. Use that Cap One card wisely and get a few more cards (avoid Credit One, high fees) and even consider a secured card. Once you get your score up to 620 or so you would probably qualify for a car loan under 10%. You can stop paying your current car loan anytime and tell Chase to come and get it with no repercussions. They can't put a repo on your credit report as the loan should already be marked $0 balance, included in BK.


Fico 08: 720/721/719 TU/EX/EQ
Message 2 of 14
New Member

Re: What to do about car after BK

Thank you! I plan to use the capital one card for a myfico scorewatch supscription and PIF each month. I applied for fingerhut but not sure if that was the smartest idea? I don't see myself buying things on there each month to keep the card revolving. I am up to date on payments with Chase, so I will continue to make them.

Message 3 of 14
New Member

Re: What to do about car after BK

Hello laura2434

As long as you keep sending in your $370 every month nobody is going to come repossess your car. If you can save money to buy another car outright do so but first get a small emeregency account . You could miss 2 to 6 car payments and the car company (Suburu/Chase) could  drag there feet to get the car back. 

Message 4 of 14
Community Leader
Valued Contributor

Re: What to do about car after BK


laura2434 wrote:

Thank you! I plan to use the capital one card for a myfico scorewatch supscription and PIF each month. I applied for fingerhut but not sure if that was the smartest idea? I don't see myself buying things on there each month to keep the card revolving. I am up to date on payments with Chase, so I will continue to make them.


Fingerhut credit is issued by Web Bank and approves small credit limits with pretty low scores, you might have a decent chance of approval. You don't have to purchase something on it every month to keep it active, once every 6-7 months is enough, and Fingerhut is usually over priced anyway.


Fico 08: 720/721/719 TU/EX/EQ
Message 5 of 14
Community Leader
Super Contributor

Re: What to do about car after BK

Mine stayed active for over two years without ever using it.

Most Recent FICO 8 Scores EX601/TU580/EQ589 12/08/2017 Starting scores 553/485/543 08/25//2017
~~~Credit lines~~~~
SDFCU VISA Secured $250
Discover Secured $200
Message 6 of 14
New Member

Re: What to do about car after BK

So update: I purchased myfico scorewatch. It is only showing my score through Equifax.  It's showing at credit score 585.

 

I was approved for Capital One Platinum with a $500 limit, Finger hut with a $230 limit, and Military Star Card with a $4200 limit. I'm working to get a small credit builder loan. That should be enough right now to start credit rebuiliding if I PIF each month correct?

Message 7 of 14
Community Leader
Super Contributor

Re: What to do about car after BK


laura2434 wrote:

So update: I purchased myfico scorewatch. It is only showing my score through Equifax. The other two are showing as "no score and report". Anyone know why that would be? It's showing at credit score 585.

 

I was approved for Capital One Platinum with a $500 limit, Finger hut with a $230 limit, and Military Star Card with a $4200 limit. I'm working to get a small credit builder loan. That should be enough right now to start credit rebuiliding if I PIF each month correct?


Yes. Are you eligible for NFCU?

Most Recent FICO 8 Scores EX601/TU580/EQ589 12/08/2017 Starting scores 553/485/543 08/25//2017
~~~Credit lines~~~~
SDFCU VISA Secured $250
Discover Secured $200
Message 8 of 14
New Member

Re: What to do about car after BK

No unfornately I had to burn them and USAA during the BK.

Message 9 of 14
Community Leader
Valued Contributor

Re: What to do about car after BK


NormanFH wrote:

Mine stayed active for over two years without ever using it.


Different lenders have different policies for inactivity. A Target Red card CC was one of my earlier CCs after my 2010 BK7. But I don't shop much at Target. After 12 months of inactivity they lowered my CL from $1200 to $200. I bought things online for several months but never could get them to budge from the $200 CL so I closed it. So I'm gun shy and never let a card go more than a few months of non use.


Fico 08: 720/721/719 TU/EX/EQ
Message 10 of 14