     David Temkin (Dtemkin) | Saturday, September 16, 2000 - 07:48 am 
I'm contemplating surrendering my car when I finish up all of the ch7 paperwork next week. My main driving (no pun intended) reason is that the car is only worth $12,500 but still has $15,500 left on the financing. I don't have the cash to redeem it.
My credit union (who I got it through) only reports to Equifax (not to Experian or Transunion). If I remain current on my payments up until the date of ch7, then what can they list the account as on my credit, and will it affect my credit score - or no, because it was lumped into the ch7?
Any help would be MUCHO appreciated. I'll keep it if it means not screwing my credit further than the ch7 will (by showing a repo or something like that), but I'd rather take the easy-out, and give it back. I've got an old car sitting around that I can drive for 6 months or so until the bnk discharge and such happens and I can attempt new financing.
Thanks,
-Dave |
| Senator (Senator) | Saturday, September 16, 2000 - 07:59 am
you can anticipate very few lenders offering you decent financing following a bk ch7. when I was discharged I got 24.7% and then 6 mo later got 17%. depending on what you are paying right now, consider reaffirming which will help return the score somewhat. consider what the budget is, can you afford the payments. if the answer is yes, i'd argue to keep the car. good luck
p.s. if it is ford, you can forget about any payments post bankruptcy being provided to improve your credit. they don't report. that is their policy. you can turn the car in. they don't care. so use them just as they use you. |
| Mitch (Voigtkampff) | Saturday, September 16, 2000 - 12:36 pm
One of my clients got a 4% interest rate on a new car loan at Saturn 4 months after discharge. Unknown how they did that or if it unusual. But I had given them some advice post-discharge, including the recommendation that they read the posts here. Also unknown who the lender was.
I have seen no indication that re-affirming or not has an effect on credit or is considered in the FICO criteria. Even if the debt is reported differently on the credit report, perhaps as "included in bnk but reaffirmed", does the FICO model care?
This is non-responsive, but if your question is prompted by a negative equity situtation, then consider fixing the negative equity issue. Some jurisdictions allow a debtor to use 11 USC 506(a) to reduce the amount of the lender's lien from $15,500 to the actual FMV of the car, in your case $12,500. The other $3,000 is an unsecured amount which has the same status as any other credit card. In other words, a chapter 7 discharges it. In this jurisdiction, this is easily done in a chapter 13. Of course, one should expect a disagreement as to the value of the car. The lender will probably say that it is worth $20,000. I've never tried it with a 7. I've heard that it can be done but I have NEVER personally researched it.
Ask several local attorneys how the judges in your jurisdiction treat this. Due to my inexperience, I will not respond to any questions about 11 USC 506(a). |
| David Temkin (Dtemkin) | Saturday, September 16, 2000 - 12:42 pm
If I do decide to surrender it, is it treated just like any other unsecured debt? Will it show as a reposession or something of that sort, or just as "Discharged in ch7, xx/xx/xx". I'm just concerned about how lenders might view it if it's a repo, versus just discharged.
If I can use 11 USC 506(a) (which I'm going to bring up to the lender personally to see what their response is - they're a small credit union, and, believe it or not, when I approached them about the ch7 thing, they were more than friendly), I probably will. I can definitely afford the payments on the car, but if a just-plain-reaff is going to leave me with an out-of-equity car, forget it.
Anyone know?
Thanks,
-Dave |
| Amy Duncan (Amydd) | Sunday, September 17, 2000 - 12:14 am
I don't know if mine was just a fluke, but I turned in my vehicle with my chapter 7 (it was a lease, if that matters) and it showed up simply included in b/k. Nothing about a reposession or anything. |
| Christine Baker (Admin) | Sunday, September 17, 2000 - 12:54 am
Only the creditor knows how they'll report it.
Also, whether to keep or surrender the car depends on so many factors.
Personally, I wouldn't want to have such a big car loan if I could avoid it. But if you're in sales, you may have to "impress" clients.
If you have a $2,000 car, you got over $13k saved, even before interest. AND, the interest savings alone might pay for a lot of starters and alternators ... Of course you have to look at your commute, the gas mileage, insurance cost etc. too. Look at the numbers!
Frankly, I can't imagine wanting a $10 or $15k car ever again. |
| Senator (Senator) | Sunday, September 17, 2000 - 02:34 am
Perhaps you should try walking in to a dealership that advertises in the newspaper as being able to help those who have declared chapter 7 and getting an idea just how they can help. Remember however that an honest car salesman is an oxymoron--it doesn't exist. don't let them run a credit report.
Many do offer help-----on used vehicles on their lot that no one wants to buy unless they have to.
My advice is to dump the car, reorganize priorities, and save, save , save cash and resolve to never find yourself in this situation again. |
| David Temkin (Dtemkin) | Sunday, September 17, 2000 - 06:42 am
Christine,
If I were to dispute it (say they reported it as a repo), would I have a basis for disputing as having it showed simply as "Included in ch7"? |
| Christine Baker (Admin) | Sunday, September 17, 2000 - 02:49 pm
I really don't know. You can always dispute the repo and see what happens.
But I'd contact the credit union and ask them. If I was the lender, I would certainly agree to report the loan as "included in bankruptcy" as opposed to "repo" in exchange for a voluntary return of the vehicle in decent shape.
I imagine that repo'd vehicles are often abused just like foreclosed homes. I've seen homes that were gutted because the owner had sold everything from the kitchen cabinets to the water heater.
Give it a try! And of course, get it in writing.
And with regards to Senator's comments, I totally agree and just want to add that I definitely wouldn't want to have to get dealer financing after a bankruptcy. Not only are the rates high, but they probably sell you way overpriced junk.
You're NOT in a good negotiating position. |
| Amy Duncan (Amydd) | Sunday, September 17, 2000 - 10:46 pm
A quick word of warning about going to dealerships. It would appear that a dealership can run a credit report on you, WITHOUT your knowledge, when you take a vehicle for a test drive. They get all the info they need off your drivers license. A friend of mine was out looking at cars and took one for a test drive. They wanted him to fill out some little nothing papers and he said no, he did not want to because he did not want a credit report inquiry on him. He said he would be getting financing through his credit union if he decided to buy the car. He did not buy the car there, however sometime later he noticed an inquiry on his credit report from them. He called them and the credit bureau and was told it was perfectly legal. If I remember correctly, it was taking it for a test drive that made the difference somehow. |
| Christine Baker (Admin) | Sunday, September 17, 2000 - 11:24 pm
I've heard that before.
And, it's happened to me with AT&T last year, as well as earlier this year with the phone company. I advised both that I did NOT want my credit files accessed, both promised not to, and did it anyway.
Do you think a SIGNED promise not to run the credit prior to handing over that driver's license would hold up in court?
I think the next time I refuse to authorize a credit inquiry, I'll just try that. |
| Shylock (Shylock) | Monday, September 18, 2000 - 04:16 am
http://www.ftc.gov/os/statutes/fcra/coffey.htm
1. Section 604(a)(3)(F) permits CRAs to provide consumer reports to any party who has a "legitimate business need for the information in connection with a business transaction that is initiated by the consumer." You ask whether this provision allows a dealer to obtain a consumer report on a person who "comes to an automobile dealership and requests information" from a salesman about one or more automobiles. In our view it does not, because a request for general information about products and prices offered does not involve a business transaction initiated by the consumer.
More generally, you ask "when is the beginning of a business transaction" initiated by the consumer? In responding to this question, it is important to note that Section 604(a)(3)(F) limits this "business need" permissible purpose to transactions (i) that are "initiated" by the consumer and (ii) where the seller has a "legitimate business need" for the information. The staff's view is that an automobile dealer may obtain a report only in those circumstances in which the consumer clearly understands that he or she is initiating the purchase or lease of a vehicle and the seller has a legitimate business need for the consumer report information in order to complete the transaction. (emphasis added) |
| Christine Baker (Admin) | Monday, September 18, 2000 - 01:55 pm
Yeah, I've read that before, and thanks for posting it.
However, in reality it's my word against theirs. I'd expect to have 3 used car sales people showing up in court, clearly remembering that I requested financing.
I'd also expect that they would NOT run the credit if they signed a piece of paper to that effect.
I'm not aware of anyone ever having sued for an unauthorized inquiry. I didn't, and it happened twice now.
If I had a piece of paper with their signature stating that they wouldn't run my credit, including the fine for violations, I think I could sue without a lawyer. At least I'd try. |
