Bankruptcy Question - Car Loan

[website2560]

What is the name of your state (only U.S. law)? NY

Was able to get a car loan with very poor credit.
Was considering bankrupcty in the past and trying
to improve credit.

If I decide to do bankruptcy, what would happen to the car and loan?

 

[LdiJ]

What is the name of your state (only U.S. law)? NY

Was able to get a car loan with very poor credit.
Was considering bankrupcty in the past and trying
to improve credit.

If I decide to do bankruptcy, what would happen to the car and loan?

You would have the opportunity to reaffirm the car loan, therefore getting to keep the car. However, that assumes that after bankruptcy you would be able to make the car payments and keep the car insured. Otherwise the car is included in the bankruptcy and gets repo'd.

 

[swalsh411]

You are probably getting royally screwed on the terms of your loan. If you do declare bk you might consider giving up the car and paying cash for a used car.

 

[Mass_Shyster]

You may be able to keep the car and continue making payments without reaffirming the debt. If you owe more or close to the value of the car, the finance company may take that chance. It depends on the amount of equity in the car among other factors. The finance company continues to hold a security interest in the car, so can repossess if you miss a payment. The upside is that if this happens, you won't be responsible for any deficiency after the car is repossessed since you did not reaffirm the debt.

 

[website2560]

Thanks for the comments. The vehicle was $18K and it's a 2010 with low miles.
If I do bankruptcy, you're saying the car would be repossessed?

 

[FlyingRon]

Read SteveF's post again. They have the right to repo the car if you don't reaffirm, but they don't have to. Most times they'll be plenty happy if you keep paying the loan. As others have told you the LAST thing you want to do is reaffirm a loan you can't afford to pay, and you'd be ill-advised to affirm a loan with onerous terms even if you could afford it.

Your underlying premise here is wrong anyhow. Bankruptcy is NOT going to improve your credit.

 

[website2560]

What do you mean by reaffirm the loan?
Is that mean I'll keep paying it?
Sorry, this is new to me

 

[Mass_Shyster]

What do you mean by reaffirm the loan?
Is that mean I'll keep paying it?
Sorry, this is new to me

See this link:

http://bit.ly/VCOrNd

 

[LdiJ]

What do you mean by reaffirm the loan?
Is that mean I'll keep paying it?
Sorry, this is new to me

It means that via the bankruptcy proceeding you agree to basically not include the car in the bankruptcy and to continue on with the current contract that you have. You would only do that if you want to keep the car. Since it might be quite difficult to buy a car after the bankruptcy is final, that is one reason why you might reaffirm the loan.

Others are saying to not reaffirm the loan but keep paying the car payment. In that case, the loan company is unlikely to repo the car because they are still getting paid, and they would much rather get paid than repo the car. If that works it gives you some flexibility because you can keep the car and eventually pay if off, but you could still stop paying for it and let them repo it without being responsible for any shortfall when they sell it.

Yet others are stating to let the car go completely in the bankruptcy, because you probably got a bad credit deal, and to find some other way to get a car. I don't necessarily agree with this one, particularly if its a good car and you would have difficulty obtaining anything reliable.