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My chapter 7 lawyer is about to file my bankruptcy, but I can'r decide if I should keep my car or let it go. I bring home after tax 3,850 a month. My current car is a 2015 KIA Optima EX I bought brand new, but carried over negative equity from the car before it. I do have GAP just in case.
I'm mainly filing chapter 7 because of a divorce that left me with maxed out CC, 2nd car repoed, 100k+ medical bills, ect. Assuming I keep my current car loan. I'll have 1,500 to 1,700 a month left over for food, car gas, and whatever else. But if I let the car go back i'll need a new car asap.
Here is why I think I should keep my current car. It has zero negative marks on my credit. Always paid on time. 55k left on warrenty. I do not want to have to compromise on my next vehicle purchase.
I'd like people's input on if my decision to keep my current car is the right decision.
A 2015 Optima with about 40k miles is worth about $13k. In addition to answering the questions above, consider another option: a redemption. With this you buy out the vehicle for what it's worth. Some obtain loans from other lenders while in bankruptcy, though this is usually not able to be done at a low rate. I took out a 401(k) to redeem my car.
No matter what you do, it is unlikely that reaffirming your auto loan will benefit you. If for some reason you do, make sure to carefully review the GAP limits on your policy. It is possible to reaffirm a loan, total the car, then have GAP pay out some, but not all of your GAP, leaving you with a deficiency balance. This usually occurs when people add a lot of negative equity to their new auto loan.
In the same situation, had you NOT reaffirmed (and just made payments to keep the loan current) many lenders would not have treated you any different, other than not reporting the loan on your credit report.. But if you stop paying on loans that you didn't reaffirm (because the car was totaled and you had a deficiency balance you couldn't pay, for example) then your only obligation is to coordinate with the lender how the oculd pick up the car.
I still owe 19,248 on the loan.
Car rental for same size car I have now is 300 more per month than I pay now.... NOT doing that.
Is public transportation an option? What about Uber/Lyft? Depending on where you live, Uber/Lyft might be cheaper than making car payments + insurance + maintenance + gas + parking. Few years ago, I had a friend in LA who spent $750/month on Uber. When she owned a car, she was spending way more than that: $400 car payment, $200 insurance, $120 gas, $200+ parking, $xxx maintenance. Also, at the end of one calendar year (2012 or 2013), she got a huge gift basket from Uber worth >$1,000 for being one of the top Uber users in LA.
If Uber/Lyft is not a viable option, then I'd buy a super cheap car. Like $1,000. Become friends with a local mechanic and see if they have an old car that they're willing to sell (or they might know someone). Or ask your extended family or friends to see if anyone is trying to get rid of an old car. My brother need a car 3 years ago, and a friend of his gave him his old car: a 1999 Lexus with 250,000 miles. This car STILL RUNS really well.
My only options is to keep the car or let it go and buy new/used.