AttyOney-Please help!

[robertrk]

What is the name of your state?What is the name of your state? MD

I am not sure how to handle this. The auto we currently have has a balloon payment due in March 05 of approx. $9500.00. The bank that has the lien on this vehicle said even though we are paying our auto loan outside the plan, we are still in default. Therefore, in March 05 we will need to pay the full amount. The bank also said, (and so does the back of the contract) that since we are in default we cannot sell the auto back to them in March, and we cannot refinance the auto. It appears the only option is to pay the full amount which we cannot pay the full amount. So how do I handle this? What will happen if we take the car back to the dealer and tell them we are turning the car back in? Will we be responsible and/or owe more monies to the bank? Will they be able to come after us for the balance? Since we made all payments on time, never once late, will this last balloon payment that will not get paid be considered a reposession? Will the bank be able to charge us with anything? I am so scared. I am trying desperately to sell the vehicle or refinance. However, there is no one out there that is willing to refinance us as long as our bankruptcy is still open. The only option I found out today was that CarMax said they will buy a vehicle without you having to buy one from them. However, if their appraisal is less then the balloon payment, I will have to pay them the difference. We are in Maryland. Does anyone have any suggestions on what I can do. Time is running out and I am getting very nervous and scared. We have been in Chapter 13 for 24 months now. We have 36 months left.
Thank you for your time, help and support.

[djohnson]

Why are you paying them outside of the chapter 13 payment? Why did your attorney allow that?

[Nick P]

Talk to the creditor and see if they will release the lein on the car if the car is sold for less than the owed amount. You will still owe the differents between the selling price and the loan amount.

[Nick P]

Another thing you could do is trade the car in for another car which would result in you being upside down on the trade. The dealer would then build the differents between the trade-in and the amount owed into the new loan. You would be charge a large interest rate as well since you have filed for chapter 13. There are loan programs out there to rebuild credit. Most do require a strong co-signer.

Another option would be to have a friend or relative obtain a loan for you and you repay them.

[djohnson]

Originally Posted by Nick P

Talk to the creditor and see if they will release the lein on the car if the car is sold for less than the owed amount. You will still owe the differents between the selling price and the loan amount.

The bank is not going to do this, he is still in bankruptcy.

[djohnson]

Originally Posted by Nick P

Another thing you could do is trade the car in for another car which would result in you being upside down on the trade. The dealer would then build the differents between the trade-in and the amount owed into the new loan. You would be charge a large interest rate as well since you have filed for chapter 13. There are loan programs out there to rebuild credit. Most do require a strong co-signer.

Another option would be to have a friend or relative obtain a loan for you and you repay them.

I'm not sure how you can even suggest this. He is still in a chapter 13, a new loan is forbidden. Who would give him one anyway?


OP please respond to my first question. Did you sign a reaffirmation? When did you file? Why are you paying them outside the bankruptcy? Why did your attorney allow that?

[robertrk]

We filed in Nov. 02. Our atty advised that because we were current with no lates, slow or missed payments at all with our auto loan, that it would be paid outside the plan. We were not asked nor did we sign any reaffirmations. As a matter of fact, during our 341 mtg., we advised the trustee this auto loan was a conventional lease. He said no it wasn't and we would just continue making payments, outside the plan, until it was paid off. I questioned my atty at that time and told him right outside the court that day that it was a lease. He said we will go by what the trustee says. So now we are two years paid into our 5 year plan and our balloon payment on this vehicle is due March 05. I called the bank that holds the lien on this car and they said we are excellent paying customers and they would love to keep us. However, they cannot refinance the balloon payment due because we are in current bankruptcy and it has not been discharged. They also said we cannot sell the vehicle back to them either. They said either we have to pay off the balloon payment of approx. $10,000. in full as of March 05, or find someone to refinance the vehicle. The bank said to find someone to refinance the car while still in chapter 13 will be slim to none. I asked the bank what will happen if I turn the car back in March 05 at the end of the term since I cannot pay the final balloon payment. The bank told me it would be considered a reposession. I don't know how they can call it a reposession since they are not allowing me to continue paying when I have never missed any payments during the entire time I have had the vehicle. I have researched and called many banks, finance companies, etc., and so far no one will refinance this vehicle until the bankruptcy is discharged. Does anyone know of any company out there that would be willing to refinance while we are still in chapter 13, if we get the approval from the trustee? I have been staying up many nights trying to figure this out and I keep running into a brick wall. Thanks again for everyone's input. It is greatly appreciated.

[Ladynred]

Ok.. why can't you modify your CH 13 to now include this auto lease/loan ?? Your position is pretty ugly, add it ! They would then have to either accept the payments thru the plan, or suck it up when the debt is discharged. I would think this would protect you from any deficiency and repo too.