Bankruptcy Question WWYD?

[chocovrdmicears]

I am in the process of helping a family with some serious financial issues. I PROMISE you this is not a family with tons of credit card debt and a Disney Trip planned..so please put on your compassionate hats.
This is a family in which both parents are working their tails off, made some bad financial choices over the years and are truly trying to get themselves to a better place. For the past year they have been fighting to keep their house because of a mortgage scam. They have been dedicating a lot of their financial resources to keep their house.
Here is the current problem they are facing.
He filed bankrupcty about 4 or 5 years ago. They had a 6 year car loan which they have continued to pay for the past four years despite not having a contract with them because of the bankruptcy (not sure how that specifically works). But they have missed and pushed out some payments over the years.
They are currently 3 months behind. The have a solid financial plan to pay off the loan by the end of the year. Here is the problem. The loan apparently comes due this month. The car company sent a letter wanting the entire $3000 by the end of Oct. There is no way he can come up with that kind of money. He keeps calling to try and talk to someone to explain and arrange payments or find out his options, but because of the bankruptcy laws, no one will talk to him (they say legally the can't).
Now he knows they can come and reposses the car at the end of Oct if the entire $3000 is not paid in full by the end of Oct..but WILL they if he keeps making payments?
He desperately wants to pay off the loan...but he is afraid if he makes 3 payments of close to $600 each over the next 6 weeks, (outstanding balance on the loan at that point will only be about $1100) they will come and take the car anyway because the loan *ends* this month.
Does he continue to make the payments and *HOPE* they won't come get it? What do you think would be the best way for him to handle it?

 

[luvsJack]

Since his credit is in the toilet anyway, would it be possible to take the money he needs to pay on the car and purchase some thing used, just to get by with for now and let them just come get the car? It sounds like the car is in the bankruptcy anyway, and if not they may can still add it in. That way they can focus more on their home and put all the money toward that.

I know how hard this is your friends. I have been there and it feels like there is no light at the end of the tunnel.

 

[aka-mad4themouse]

Point him in the direction of the CreditBoard.com Forums . There are people there who can answer his questions and give him advise on how to handle this.

 

[MiniGirl]

I will be the first one to say I have no experience with bancruptcy laws, so I have no idea if what I'm suggesting is even possible.


However, could he sell the car and use the money from the sale to pay off the loan? Then he'd just need to get a clunker or a motorcycle or something for transportation.

 

[chocovrdmicears]

Since his credit is in the toilet anyway, would it be possible to take the money he needs to pay on the car and purchase some thing used, just to get by with for now and let them just come get the car? It sounds like the car is in the bankruptcy anyway, and if not they may can still add it in. That way they can focus more on their home and put all the money toward that.

I know how hard this is your friends. I have been there and it feels like there is no light at the end of the tunnel.

He considered the option of using the money to get a used car for the time being. BUT he would really like it to be the last option. Which is why he is struggling with what he should do with the the $1800. He has spent almost 6 years paying on the loan. He has paid over $20K on it and with less than $3K left it kills him to just give up an walk away at this point. The car is in fantastic condition and he could get many more years out of it. Currently his house situation is stable (thankfully). Do you think if he makes those payments over the next 6 weeks, then paying off the $1100 by Dec, they will still come and take the car?

 

[luvsJack]

He considered the option of using the money to get a used car for the time being. BUT he would really like it to be the last option. Which is why he is struggling with what he should do with the the $1800. He has spent almost 6 years paying on the loan. He has paid over $20K on it and with less than $3K left it kills him to just give up an walk away at this point. The car is in fantastic condition and he could get many more years out of it. Currently his house situation is stable (thankfully). Do you think if he makes those payments over the next 6 weeks, then paying off the $1100 by Dec, they will still come and take the car?

I would be afraid they might unless he has some kind of agreement with them. I have never had a car repod but my sil has, and she was in the process of trying to catch up when they came and got it (she didn't have an agreement with them but was sending money weekly toward the back balance, she wasn't as close to paying off the car as your friends).

Since they won't talk to him because of the bankruptcy, is the car included in the bankruptcy? If it is and there may be more to it then them being able to come and get the car. I thought creditors had a certain amount of time to make their claims and/or pick up the things that were financed. Maybe he can talk to his bankruptcy lawyer and have him/her talk to the loan company.

 

[cassie714]

He made a reaffirmation agreement with the creditor and they are much more strict and will give you much less leniency on the payments. This no longer appears on his credit report, so from the creditor's point of view they dont have much to bargain with. His best bet would be to contact the lawyer he used for the bankrupcy or even the trustee if he is still involved. Other than that the creditor can come get the car at any time if he is behind even a month.

 

[Chicago526]

Is it at all possible that you and/or other family members can pay it off for him, and have him pay you all back on the schedule he was planning to pay back the financing company? It doesn't sound like you'd be out the money long and this person seems like they are trying really hard to get it together, so it doesn't sound like trust is an issue. You're right, it would be a shame to have them take the car after paying so much for it and being so close to paying it off.

 

[singnring]

You said the bankruptcy was 4-5 years ago.

My daughter just filed earlier this year and was told she should be able to start rebuilding her credit within a year.

Since it has been 4-5 yrs, is it possible for him to go to a lender and borrow the money on a short-term note to pay off the vehicle?

The lender would get the title from the current lender and have it as collateral against the note.

That would buy him some time to finish paying it off as planned.

I would hate to see him lose the vehicle after doing so much to keep it and paying so much money for it!

Keep in mind, if it is repossessed, they will sell it at auction and he will still owe any deficite in the selling price and the amount he woes on it.
So he could end up still owing even after repossession.

It makes sense to do whatever he needs to to pay this off and keep the vehicle.

 

[Cheshire Figment]

I would strongly suggest he go to the attorney who was used for the bankruptcy for advice and assistance.

 

[wdwfan16]

I beleive they can take the car. The best option is for him to pay the most he can and borrow from a friend or family member the remainder and pay them the $600 payments.