Had first meeting with attorney yesterday. We had one car repossessed in October. He gave us contact info for a dealer that will get us a new car the day we have a case number. (National automotive broker services) He said we could include car we still have if we want.
We have Owe $20k and it's probably work $13k and apr is 15%.
I do not want two car payments, and I do not want another bad rate or 6 year loan.
Should we include current car and get a new one (in hopes to get better loan)? Should we keep current car and wait until scores go up? (If so, how would it work, do we trade in or do voluntary repo?) Should we keep current car forever?
My main goal is to have a safe reliable family car that we can pay off asap and have no car payment. We can buy a cheap second car cash. And I don't think we could afford a payment any higher than current payment of $565. Our ultimate goal in bk is to be able to buy a house at some point.
Well, In bankruptcy you have 3 options for secured debt (a car loan or mortgage):
1- Include the loan in your BK and surrender the car when the lender requests it. Usually they won't come for the car until after your discharge, which is usually 3-4 months after filing. They can file a request with to repo the car before discharge, but this is not common.
2- You can reaffirm a loan and continue to make the payments. For a car on which you "owe $20k and it's probably worth $13k and apr is 15%" this really isn't an option for you. No reputable attorney would let you do this, and many BK courts will not allow it. When you reaffirm a loan in BK you are on the hook for the full amount of the loan. If you get into trouble in the future and they repo the car they can get a judgement against you for the "deficiency", the amount you owe less what they sell the car for. When you include the debt in BK the debt is discharged, and all they can do is repo the car, end of story.
3- This 3rd option MAY work for you: "Pay & drive". You include the debt in BK but continue to make the payments on time. Many lenders will let you do this, some will not. Ask your attorney to check with the lender if they will let you do this. The advantage to this is that you can stop making payments and let them repo any time you want - such as when your credit rebuilds and you can get a decent rate on a loan for a new (to you) car.
*** I am not an attorney and this is not legal advice. I'm just someone who went through BK 7 years ago and researched my options