New Member. New C7. What to expect?

[Anonymous]

Hello to all...

So, I've visited this forum off and on for a while, but have yet to become a member until today. And I'm hoping that you can give me some guidance. 

I've filed for C7 BK protection a couple of weeks ago. Without getting into details, 50% was definitely of my own doing, and 50% was not. I've got a great attorney, but still...I'd rather come to those who've gone through it.

My biggest question, is my car. I had two vehicles, both financed through Bridgecrest (one DriveTime, the other Carvana). In the BK, I gave back the DriveTime car, as it was unreliable, and needed far more work than I could afford to throw at it. The Carvana vehicle, on the other hand, has been great. 

My lawyer is telling me NOT to re-affirm the Carvana vehicle, and to just keep paying on it...that it would be "highly unlikely" that Bridgecrest would come to get it. Since I trust him, I'll keep doing that.

However...

I'm paying 27.48% interest on the car. I can afford the payment - but it seems excessive. 

With that said, here is what I'm thinking:

1: Is there any bank or lender that will re-fiance the loan after the bankruptcy is discharged? I currently owe about $12K. It is a 2017 Passat.

2: Assuming the answer to the above is "No"....are there any banks or lenders that will finance me for a new car at a lower interest rate? 

I do not have a cosigner, nor do I want one. 

However, I can definitely save up money for a down payment. Also, once the bankrupty was filed, my score went from a 476 to a 627. Not sure how much longer that will stay up, but...it's the first time I've ever seen my score that high. And that is where it currently sits.

Am I missing anything else? I don't want to run out and get a credit card, nor do I want to sink myself into any uneccesary debt. Rather, I want to use this as a "fresh start", and try to lower my payments in some way. 

I appreciate everyone's assistance. 

- S 

[sccredit]

I agree with your attorney at that interest rate. If you are current on the car loan I'd keep paying it. Once you get past discharge you can start checking Capital One for an auto preapproval as well as Carvana. I would think a few months out of bankruptcy you will be able to do much better on the rate. At that point you can tell Bridgecrest to pick up the car.

[anniea4001]

With that interest rate, I would not reaffirm either. In my opinion is not worth it.

I discussed both options with my lawyer when I filed and she explained what would happen if I reaffirmed and what would happen if I did not.

Because I had a very new vehicle, low miles with a good lender and a fair interest (5.8%), I decided to reaffirm.

For what I have read here and learned from my lawyer, if you decide to not reaffirm, many lenders tend to be very difficult to work with. As far as I can tell, you will not be able to refinance it and the loan will not be reported. 

There are a lot of posts here about people who managed to refinance their loans a few months after their discharge. Mainly with credit unions. Also many users report getting pretty decent loans (new) a few months after BK and refinancing to lower rates. 

As far as scores, everyone has a different credit profile but for reference I am going on 3 months post discharge and my FICO scores are all above 650. Fico 9 which some credit unions use already hit the 700s. 

[Horseshoez]

My question to @Anonymous is this, you owe roughly $12,000 on the Passat; are you about even on the car, underwater, or do you have equity in it?  If you have equity, I personally might be inclined to reaffirm the car as that will make it a heck of a lot easier to refinance after your discharge.  If you are pretty much even on the debt/equity ratio, then the decision to reaffirm is much more murky; how much do you like the car?  Finally, if you're underwater, do not, under any circumstances, reaffirm.

[Anonymous]

@Horseshoez  - I owe $12,998. If I were to sell it back to Carvana (or even Carmax), I'd get between $12,000 and $12,100. So I would just about break even. 

How much do I like the car? Honestly, it's a great car. It also has 63K miles on it, at this point. 

This is why I'm at a loss as to what to do. 

[anniea4001]

Well, I guess the question is, do you love the car enough to justify continue paying that high interest loan? 

Or do you see yourself wanting another vehicle any time soon? 

[Anonymous]

"...do you love the car enough to justify continue paying that high interest loan?..."

I absolutely love the car. And with the gradual decline of the midsized/large sedan, I need to be careful. I hate SUVs, and I'm too...um..."zaftig" to fit into a compact car. 

My problem, is that I have a lot of fear...

Fear 1: Suppose I re-affirm the loan at that rate, continue paying on it, and not be able to find another lender that can re-finance the balance at a lower rate?

Fear 2: Let's say I sell the car, and break even. I'd be without a car for a while, as I need to build up savings, and do not live in an area where I can rely on others (or public transport) to replace it. Suppose I save up a down payment, and can't get a dealer to finance me?

Fear 3: Let's assume I just continue to pay, and not re-affirm the loan. What's to stop the lender (Bridgecrest) from coming to my home and taking the car for shiggles?

This is the kind of stuff that keeps me up at night. 

[anniea4001]

Understantable.

I have seen several people in this forum say they did not reaffirm the loan but continue paying it and have not had any issues.

I would suggest discussing this with your lawyer. But, I was advised by mine that if I decided not to reaffirm I could still keep the car as long as I kept making payments as agreed. The problem of doing this is that lenders tend to be difficult to work with when you do not reaffirm.

Reaffirming just means that if something happens (you default or total the car) you still liable for whatever is owed and not covered by the insurance per say. So the lender could sue you for any deficiency. So even if you do not reaffirm, you can keep it as long as you continue making payments as agreed. Just be ready to deal with maybe a little rudeness and lack of cooperation from the lender should you ever need to reach out to them or need anything. 

Would you consider not reaffirming and keep making payments for a few months while you rebuild and save some money for a down payment on another vehicle? Maybe a newer version of the same.

I drove sedans for years until I got into an SUV and never went back lol But that's me. I bowed to never be that low to the ground again unless I had no other choice 

[Horseshoez]

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@anniea4001 wrote:

I have seen several people in this forum say they did not reaffirm the loan but continue paying it and have not had any issues.

I would suggest discussing this with your lawyer. But, I was advised by mine that if I decided not to reaffirm I could still keep the car as long as I kept making payments as agreed. The problem of doing this is that lenders tend to be difficult to work with when you do not reaffirm.

Reaffirming just means that if something happens (you default or total the car) you still liable for whatever is owed and not covered by the insurance per say. So the lender could sue you for any deficiency. So even if you do not reaffirm, you can keep it as long as you continue making payments as agreed. Just be ready to deal with maybe a little rudeness and lack of cooperation from the lender should you ever need to reach out to them or need anything. 

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While all true, @Anonymous is paying a very steep interest rate and has expressed an interest in refinancing the car as soon as possible after discharge to reduce the interest rate/payment.  While refinancing is not impossible without reaffirming, my understanding from this forum and others is it can be HIGHLY challenging to work with a lender one has not reaffirmed with.  My gut tells me if @Anonymous wants to keep the car and then refinance down the road, reaffirming is the best approach.  If letting the Passat go and buying something else is the best option, then reaffirming would be worthless.

[anniea4001]

@Horseshoez 

Everything you said, has been said on the post you are quoting or the previous ones. 

That is why we are tying to understand exactly what @Anonymous wants to do.

As I mentioned initially, the current loan APR is very high so in my book, the only reason to reaffirm would be if they absolutely loved the car, the vehecle still low in miles, with warranty and were willing to continue paying such high interest loan until said loan can be refinanced after DC. 

Hence, why different scenarios have been presented and why I said that it can be very difficult to work with the lender should they decide not to reaffirm. As far as I am aware it is not possible to refinance a loan that was not reaffirmed. 

At this point is a matter of figuring out what @Anonymous really wants to do and considering the cons and pros. I would look carefully at the potential of being able to refinance. Age of the vehicle, mileage, condition, kbb value, trade in value, etc etc.