Hello everyone--I'm hoping that some of you here on this board can tell me what should be done in the following situation. This is for my brother who shared this info with me recently and I'm trying to help him. Here's the situation as I know it: He's married, 2 young kids. The bottom line is that they've overspent. Bascially, they got a loan for a house they can't afford at least not on one income and when my sister-in-law lost her job, that's when the trouble started. To save their home, they filed bankruptcy. They are struggling to make the trustee payments. They also have 2 nice cars which they are struggling with also. what he plans to do is to sell the house and turn in the cars--not trade them in. He said trading them in would just increase the payments because the current loan would just be added into the new one. They have not been able to replace the income that was lost when his wife lost her job. She was out of work for a little over a year and even though she's working now, the job doesn't pay as well. So, my question to all of you--especially some of you who are credit experts, is this what he should do? What's the best course of action to get out of this situation? He said is credit score is already low (I don't know how low). How will turning in the cars affect things? What's the best way for him to get back on track financially and credit wise? When they sell, they are planning to live in an apartment for awhile. All replies welcome! Thank you!
turning in the cars is the same as a repo. They will still be responsible for the balsnce left afterward. A repo results in you paying for a car you don't have. If you have to pay for it any way why not get it????
Have they evaluated all options? Any equity in the house for a HELOC? How about a family member or friend taking over at least 1 car w/ the payments instead of a repo, which is essentially what it is....How about refinancing at lower rates? Patelco has given alot of member of this board HUGE interest rate reductons on car loans....how about a loan consolidation program? BK is a short term solution that will haunt him for the long term.....from what I've read.
What is HELCO? Also, would they still be able to do a loan consolidation if they've filed bankruptcy? Keep in mind that they are already paying a trustee for the bankruptcy and they are struggling with that payment because of the cars. I think the feeling is that if they can get rid of the cars they would be able to lower the trustee payment. Are there still options available to them once they've filed if they are still struggling? If it matters, they live in the state of IL. Thanks to all of you who've responded! Keep the suggestions/advice coming!
Re: Looking for suggestions/ideas, You will not get approved for new credit under Chapter 13 unless the Trustee gives permission. In fact at the 341 hearing you are told not to apply for any unless you ask first. Even if they file it is highly unlikely an equity loan would be approved. Why not refile the budget so the plan payment can be reduced temporarily?
Re: Looking for suggestions/ideas, could they perhaps attempt to sell the car outright? how old are the cars? maybe they can get a friend or family member to take over the payments on the loan. there are options just need to carefully consider them. minimize the long term damages instead of looking for an easy way out by turning them in. it will show on the CR as a repo and then the car would be auctioned leaving a deficiency balance with interest and collection fees added.( not good) has the BK already been discharged? was the cars included? I would ask a financial advisor or an attorney ck out lawguru.com
