I filed BK on 11/27/01 without benefit of an attorney. (only 4 creditors...pretty straightforward). On 1/4/02, I went to my 341 meeting and had no problems. On the same date, I filed a reaffirmation agreement from Mazda American Credit with the court. I was told since I had filed without a lawyer I would need to return to court and have the judge sign the agreement. Well today was the big day with the judge and he refused to sign the reaffirmation agreement. He felt it was not in my best interests and that it was not necessary for me to sign a reaffirmation agreement since I was current on my payments and have never been late. Now I'm totally confused. Although my loan is supposed to be through Mazda, I no longer receive monthly bills and have to send payments to a P O Box that says it's Mazda's Bankruptcy Service Center. I no longer have access to my account information online and nor am able to have automatic car payments taken from my checking account. I am also frustrated because Mazda informed me that as long as I continued to make payments I could keep the car, but they would not report the fact to the CRAs. The only way Mazda will report my good behavior, according to them, is if I sign a reaffirmation agreement and have a judge approve it. And right now....the judge refuses to do so :-( I honestly don't know what to do. Keep the car, make the payments and at the end of four years still show "included in bankruptcy" on my CR. Turn the car in since I'm current and accept the "included in bankruptcy" notation, ride the bus for the next several months and save my payments to buy a cheap used car. If anyone has any insight, please let me know. Right now I've been carpooling with a friend so I'm using my car very little, but my friend will be moving in a few months so I will need a car or a good set of walking shoes and a bus pass. All I wanted to do was at least repay one of my debts so I wouldn't be such a deadbeat and hopefully start rebuilding my credit. Thanks in advance! Cynthia
"Now I'm totally confused. Although my loan is supposed to be through Mazda, I no longer receive monthly bills and have to send payments to a P O Box that says it's Mazda's Bankruptcy Service Center. I no longer have access to my account information online and nor am able to have automatic car payments taken from my checking account. I am also frustrated because Mazda informed me that as long as I continued to make payments I could keep the car, but they would not report the fact to the CRAs. The only way Mazda will report my good behavior, according to them, is if I sign a reaffirmation agreement and have a judge approve it. And right now....the judge refuses to do so :-( " ****************************************** The reason they don't send bills, is because they legally can not, since you filed BK, the act of sending a bill, would be an an "attempt" to collect a debt, which BK stops cold, same with auto. pay. w/checking, the account, while still there is handled differently. They will let you keep the car with out a reaffirmation agreement, however it will continue to be serviced by <Mazda's> BK dept., because technically with out the reaff., you are not legally responsible for the loan any longer, and could walk away @ any time prior to the loan being paid off. Because you can choose to make payments if YOU WISH is the only "contract" per se. The judge is looking after your LEGAL interests, and probably rendered that decision based on the other criteria relating to your case. <maybe you owe more than car is worth, etc.> How ever, as Mazda stated, they will not report, which does nothing for your credit, at least with the Bureaus, although you could prove, at a later date, with cancelled checks etc. that you did in fact pay, which could be helpful in the future. As far as keeping the car, I would, at least for now, and decide a course of action. If you wish to share the payment amount, approx. balance etc., please do so as to get opinions. Hope this helps.
I have a 2001 Mazda Protege LX. I owe approximately $15,000 on it, but it's only worth $11,000 according to the Blue Book(guess Mazdas don't hold their value compared to Hondas :-/). My payments are $326 per month and the interest is 4.9%. My final payment will be May 2006. I guess the judge was looking out for my best interests in case my car was totalled next month and I would still be responsible for the remaining balance. However now I have to "remind" myself to continue to make payments since I no longer receive monthly bills, make sure to send them early since Mazda holds the check for three days before crediting it to my account and keep all 60 cancelled checks so I can prove I satisfied the lien and maybe get credit for the fact I paid on time and in full. I feel like I'm being doubly punished. I'm trying to do the right thing by paying off at least one of my creditors and it will still count against me. Maybe I'm now seeing this clearly, but what is the advantage of me keeping a car that I owe more than it's worth. What's the advantage to Mazda? If I walk away, I don't have a car...but Mazda gets a car that is worth less than the lien. Nobody wins.
MAny lawyers will give this advice. A bk is a fresh start. Don't encumber that start by reaffirming or hanging on to things that are worth less than you owe. And, expect that car to depricate even more before you pay off the loan. The previous poster is corect when he says the judge is trying to do you a favor. Take him up on it. Give the car up and just buy a something basic and cheap to get to and from work.
Ok...say I just call Mazda, tell them the judge said no to the reaffirmation and tell them to pick up the car. I'm current on my payments and I've never been late. How will that show up on my credit reports? BTW before I saw the judge, all of the folks who were in court to reaffirm were required to talk a lawyer before seeing the judge. I don't know if it's California thing or just in this particular district court. There were several lawyers who work pro bono providing legal advice and explaining the pros and cons of reaffirmation. I have to admit they tried to talk me out of reaffirming, however I pointed out that without reaffirming I wouldn't get credit for paying off the loan. Their opinion...your credit is already screwed...so what's one more bad mark. Needless to say they were of very little help when I asked them questions on how my credit would be affected in the future if I continued to pay or walked away. In the end I was dismissed and told rather rudely to just go back to the courtroom and wait for the judge (later on, to my amazement, I went back and told them while I appreciated their advice I didn't appreciate their rudeness. I told them their attitude was one reason why I view lawyers as just a step above a used car salesmen. I also suggested that if they truly wanted to help their clients, they should be more understanding and less arrogant...they were flabbergasted to say the least). Thankfully I will be attending a Stephen Snyder - "Credit after Bankruptcy" seminar this Saturday so I can learn how to rebuild my credit. I was counting on my car loan plus a secured card from FCNB to get off to a good start. However now I won't get credit from Mazda and FCNB is in trouble. Too bad Cap One was on my bk...I could have applied to them for a card.
You CAN rebuild without this car loan showing. It's not like this is going to make or break your whole future of creditworthiness just based on this one creditor. It 'might' show as a voluntary repo, I've heard of that being reported, but it's up to Mazda how they'll report. You've already got the bankruptcy notation on your reports, do you really think this will make it much worse? Your bankruptcy is the opportune time to get out of something that is not in your best interest. The judge knows that. I would look at this as a benefit to you and think about rebuilding step by step. It takes TIME no matter what and in two years you can be back up there. You can also get financed for another car quite easily right after discharge. Don't sweat it so much. Do what's best for you.
I think you are very fortunate to have filed in that district. All venues I've seen, when someone files pro se, they get thrown to the wolves. You actually got FREE legal advice in a civil matter. Good for that Head Bankruptcy Judge! I'd advise to pay attention to what they said and not how they said it. One other thing they may have been thinking and didn't communicate it well is the value of the car. Blue Book is meaningless in determining real value. If you slapped a "For Sale"sign on the window today, I doubt you'd get $9500 for it. You're upside down far worse than you think and, it'll just get worse as the car depricates faster and resale value drops. Forget about the credit rating for the time being. Get your lifestyle situated so you can start saving money. You can rebuild your credit over time but the most important thing right now is getting this bk discharged and getting situated with no debt for your fresh start. Good luck to you!
Just my opinion. Release the car back to Mazda, by the time your BK has cleared up anything with the car will have cleared up. Keep the $326 per month in the bank, $1200 will get you a reliable car so you're probably 4 months out. I would say make sure before you call Mazda that you've cleaned out the car. I wouldn't leave ANYTHING with the car.
Now if I return the car to Mazda, do I need to amend my bankruptcy paperwork? When I filed, I indicated I would be reaffirming. Now that the judge has said no and indicated he would be putting an order to that effect on my record, I don't know if I need to change the paperwork so my discharge can be processed correctly.
Hello? Am I the only one not understanding this? You have a 2001 (practically new car) Mazda with a 4.9% interest rate. Soon your friend, that you are currently carpooling with, will be moving and you will have no transportation, besides your car. If you send the car back (repo, although it is included in BK) you will still have to find another mode of transportation when your friend leaves. You will have to purchase a used car paying anywhere from 20% interest and up. My advice is keep the car. It is practically new and you have a great interest rate. Keep you cancelled checks for proof that you did pay the car back (and on time). Dani
LOL...You are not the only one not understanding this <g> On my way back to work from court, I was so befuddled that I simply couldn't process the judge's words. I thought once the reaffirmation papers were signed, I could go on my merry way, wait for my discharge and start rebuilding my credit with my car loan. Now I sit here trying to make the best decision for me and my situation. Yes, I want to keep my car, but do I really need it? Could I live without it? My friend is returning to graduate school in the fall so I have 6-7 months to put aside money. I could probably pull together $4K to $5K in that time period. I could either buy a older used car or use the money to put a down payment on a newer used car and have my mom cosign the loan. Maybe it's the whole hassle of trying to make payments that's really bugging me. After I learned that my payments were being held for three days, I started sending them early by certified mail and then calling my bank a week later to make sure the check cleared. Maybe it's the fact that when I asked the lawyers yesterday what would happen to my credit, they couldn't answer my question. They couldn't even tell what would happen if didn't reaffirm and my car was totaled what would happen....would I still be responsible for the payments. Right now I'm managing the payments, but just barely. I don't have a nest egg...no emergency fund. I just wonder if it would be better for me long-term to just start over fresh, pay cash for everything for a while and slowly build credit the old fashioned way. Of course...I could just be at a lost because I had a terrible night sleep worrying about my bk and the two cups of hot chocolate I just drank ain't waking me up
Dani, Her problem is she is way upside down and it's going to get worse. Her best bet is to save some money {the $300 plus payment/month} and pay cash for a basic used car. If she does have to borrow at 20%, it should only be a grand or so. Say, she finds a $3000 car. Pay $2000 cash and finace a $1000 and just carry liability insurance. It would be a very poor business decision to keep paying for the Mazda.
Cynthia, Your next to last paragraph to Dani says it all. That's exactly what you need to do. Contact the trustee assigned to your case and ask him how to best handle the paperwork since you aren't reaffirming. I'm gonna suspect he'll want you to amend the petition.
Keepmine, Say topazmoon decides to return the car and save up the additional money for a used car. We all know what kind of car we get for $3000 or $4000. In another year or two she will looking for another car to replace the used car. There are a number of people on this board who have filed BK 3, 4, even 5 years ago and are still paying 20% + for car loans. I have a sister-in-law who is paying 26% on a used car, 4 years out of BK. Topazmoon filed BK, to my understanding, because she was having trouble making rent, auto, and credit card payments. They were exceeding her net income each month. Mazda makes a pretty good car and since the car, itself, is practically new it would last her a good 10 years if it is maintained properly. I just hate to see her have to deal with Mazda and returning the car and get a piece of junk clunker a year from now. Dani
Topaz- Have you contacted Mazda to tell them of the situation? Tell them you want to keep the car and want to make good with them, but the judge denied you that oppty.
She doesn't have to contact Mazda. When you file a chapter 7, if you're current on your secured asset (and depending on your equity and states exemptions) then you can just keep paying on it to keep it. Reaffirming isn't required. If she ends up relinquishing it down the road she isn't responsible for any left over balances, fees etc. associated with the car. Giving it up now, later or not at all is totally up to her. I think that's what she's trying to figure out. The reaffirmation is a seperate issue totally. The judge said no, that DOESN'T hurt her, especially if she does decide to let it go later rather than sooner, if anything it's not beneficial to the creditor if that happens. I know of people getting pretty darn decent rates right after discharge. It's the easiest form of financing to get right after a bankruptcy. I can't see being stuck in something that isn't good for you if you can help it. I think if she's so bad off in this deal, then let it go, save and buy another one or go shop around for financing for another car. PS> Friends got a real LEMON from Mazda, badddd situation. Anyone can have problems despite make and model of car.
News- Thanks for the clarification, I'm certainly not BK expert. However it did just dawn on me why people get so many offers for CC's and loans and such, cause you can't file BK for another 7 years, so basically one way or another than can get their money if you default again.
Hello again, here are my thoughts on your dilema; 1.) There is something known in the BK world as a "CRAM DOWN", which is essentially forcing the secured creditor to accept the current "market value" for an encumbered asset, in this case a car,<also done for Homes>, any way this is some- thing to look in to, but be careful how you speak to the judge, Don't tell him you want a "CRAM DOWN " on your car, just explain that you need reliable transportation, etc. and would prefer to keep this car, rather than getting stuck with an old junker, etc...he already knows you owe more than current value, so he might attempt to get Mazda to accept this "deal", which in my opinion, they would for the simple fact that they would have to store it, auction it, etc.... only to get wholesale value on it.......which would equate to an even greater loss for them than if they reduced the amount you "owe" to them. I am not an expert on this, and all the states handle things a little differently, it will probably require some persistance, especially w/ no attorney, but call around, talk to BK attorneys annonymously, as if you haven't filed yet, and see what they say. If you can pull this off the reaffirmation would go through, and you WIN in all aspects. If this plan does not work I would still keep the car until you are able to find some reliable transportation, I have to respectfully disagree with some of the advice on buying a $1,000- 4,000 auto------unless you are a mechanic, for get it, you will be in for real problems. Been there, done that trying to save money instead of making payments, the repairs, inopportune breakdowns, down time, just cost you more in the long run, not to mention the stress involved, towing, rental cars, it never ends, the cost of repairs is astronomical, and you still end up with an old car.
After Bk7 I bought a $3K car that lasted 5 years before I did some crazy shanigans and killed it. However in this case I would keep the Mazda. Whoever it was who made the point about the interest rate and the fact that it's a new car is totally right. Oweing 15K on 11K worth of car isn't "upsidedown"... it's "life" on almost any 1 year old car. Dispute the Included in Chapter 7 a few years down the road. Hell if you tried to trade it and a car dealer or bank saw the entry you could show them the title once you get it.
