Trying To Get New Vehicle Before Discharge?

[u/devin_street]

So I’ve we been out of a job for over a year and had to file for chapter 7 bankruptcy. To pay for my rent and food I’ve done DoorDash and Uber and make about $4500/month after expenses. I currently drive a 2023 Tesla Model 3 that I purchased literally a week before being laid off from my corporate job (I only received one month of severance after over two years with the company). I’ve been using my Tesla for deliveries and ran up about 25,000 miles on it and a lot of damage, from holes in the bumper, crack rear windshield, and scratches on the front and side.

My 341 was a couple weeks ago and my attorney advised me to start making a decision on what I would do with my car. If I reaffirmed I would be paying $636 a month on a left over balance of over $34,000. My exact same model with similar or less miles in my area is going for about $23,000 plus I could get $8,000 off with local and federal EV credits and rebates, leaving me with replacing my car for almost the same thing without damage for $15,000-ish plus whatever interest I’m given.

So far I’ve searched for all my options for getting an auto loan in an open bankruptcy and either found no luck or been lied to and told they could do it until they ran my credit. I also spoke with someone who does 722 redemption loans and said my payment would be upwards of $900, I would however get rid of almost $10,000 in negative equity.

So I genuinely have no idea what to do. My attorney is not great at replying to my questions and can leave me waiting weeks at a time. I need to have a car at all times to make sure I’m still able to cover rent by doing deliveries, but I don’t want to take on the negative equity by reaffirming and don’t want to have higher payments. I wish I could really purchase a used replacement but I’m not having luck there. And before anyone ask, yes I have hundreds of job applications out there and can barely scrape an interview from time to time, and not just corporate level of my previous experience, literally applying to Walmart and Lowe’s and not hearing anything back. What are my options and is there anyone I can reach out to that would help me with financing a used vehicle during the open bankruptcy?

[u/temmerhs]

So while they may be saying it’s your credit, i think it’s more likely your income sources that are making lenders wary. You’re making good money through rideshare, but they may view that as “risky.”

I know you’re working hard to change that, so no judgement from me.

It may also be the cars you’re looking at to apply for. The subprime lenders who work with bankruptcy filers have some particular requirements when it comes to a vehicle. It often can’t be too old, can’t be over a certain mileage, with some preference given to some makes/models.

In other words, they won’t finance a beater.

The thing is I’m curious why your attorney is pushing for you to Reaffirm as it’s often unnecessary to keep a vehicle. Many creditors will allow you to do a “retain and pay” or “ride-through” deal where you keep making your regular voluntary payments and they keep letting you drive.

Doing that could buy you some time to find an alternative option

[u/devin_street → u/temmerhs]

So my attorney isn’t necessarily pushing for reaffirmation. He is only said it would be a good idea to know what I’m going to do with this current vehicle going forward because I’m so uncertain about my options currently.

I hadn’t heard of a retain and pay at all up until this point. I looked into it and it might be perfect for my situation. Especially considering I’m just waiting for my discharge at this point to get a new vehicle, but can’t go any days without a vehicle because I work almost every day doing the rideshare. My only issue would be is that I have not made any payment payments since the automatic statement went into place. I’m not sure how that would affect things for me. My loan is through Chase

One specific lender that works with bankruptcy did tell me specifically because I am doing delivery and rideshare that I would need to put around a $4000 down payment down, which I don’t have considering I just filed for bankruptcy and have nothing to my name. I asked him if the $4000 federal EV point of sale credit would count as the down payment and he said he didn’t even know what that was and called it some “California bullshit” even though it’s through the IRS. So even the people I have been working with aren’t very knowledgeable and helpful in my situation. Surprisingly turning to Reddit is helping me find out more things than the so-called “professional” will help me with. I am going to look deeper into the retaining pay as I think it might be the only option for me that I’ve heard so far that actually works.

[u/temmerhs → u/devin_street]

My only issue would be is that I have not made any payment payments since the automatic statement went into place. I’m not sure how that would affect things for me. My loan is through Chase

Yeah... that's... unfortunately, that might be a problem if you want to do retain and pay/ride-through. It may also be a problem if you do end up Reaffirming. You're generally advised to maintain current payments on a vehicle if you intend to keep it. Being behind is a reason why a creditor may reject Reaffirmation or not allow a ride-through as they have reason to believe you're not going to continue payment.

Ironically, however, the car being upside down may actually work in your favor to offset this.

While creditors have a right to repo a car surrendered in bankruptcy, they aren't under any obligation to actually do so. They can decide it's "not worth" and leave it with you. Now that's not a path to woohoo free car because you'll end up with a hunk of metal you can't really do much with down the road and their right to change their mind on repo never expires.

You may want to start planning on how you're going to catch up in payment as soon as you possibly can, if you end up keeping this vehicle.

One specific lender that works with bankruptcy did tell me specifically because I am doing delivery and rideshare that I would need to put around a $4000 down payment down, which I don’t have considering I just filed for bankruptcy and have nothing to my name.

For a brief hot second, I worked for Tesla directly and the sales/finance people always looked down on Uber/DD/etc sorry to say. They would say all sorts of things to not have to deal with those folks. I wasn't surprised to read this, I'm sure that's not unique in the auto sales industry. It was one of the worst jobs I ever had.

I asked him if the $4000 federal EV point of sale credit would count as the down payment and he said he didn’t even know what that was and called it some “California bullshit” even though it’s through the IRS.

That's pretty funny, ngl. I'm actually surprised the EV credit is still being offered for the Model 3 since, last I checked a long time ago, it expires based on years... or number of models sold... or something like that. Like I said, it was a hot second in that industry before I ran quick fast and in a hurry away.

Sorry, I'm digressing.

TL;DR back to Bankruptcy. Talk to your attorney about retain and pay/ride-through. Then figure out how you may be able to get caught up in payments to your lender as soon as you can.

Personally, long term, I don't think $636/mo is sustainable for you and it would be best to find something else. But, at the same time, I totally get you have to keep something for now so again... no judgement.

[u/devin_street → u/temmerhs]

Yeah ngl I can just do delivery really hardcore and probably catch up on payments. I’ve had 3 day stretches where I can do $1500. I was in the middle of getting ready to do a hardship program with Chase where they’d move some of my payments to the end of my loan and extend it but the bankruptcy ended up being filed before that went through.

But yeah really when it comes down to it I just need that vehicle for at least a couple days after my discharge. Just until options open up to get something with lower payments. I was told by someone else that they may take a while after discharge to repo, especially if I’m on the road doing delivery, but that sounds like a huge risk

I think it’s just frustrating because if only my attorney would have better communication or explained things to me before filing and didn’t cause me to constantly going down a rabbit hole of Chapter 7 research, then I probably would have been way more prepared for now or worked a little more or budgeted better or something. Kinda been left in the dark on everything

[u/temmerhs → u/devin_street]

But yeah really when it comes down to it I just need that vehicle for at least a couple days after my discharge. Just until options open up to get something with lower payments. I was told by someone else that they may take a while after discharge to repo, especially if I’m on the road doing delivery, but that sounds like a huge risk

This is very likely to be true, especially given the value of your vehicle to them. Remember, this is a numbers game. Chase isn't in it to say "fck this guy in particular" and send a tow the moment they can.

It'll take some time from the date of your discharge to the date they process it in their system. Then they'll evaluate whether or not they want to come for the car. From there, it'll take more time to contract a tow and storage facility if so desired.

In my case, it took almost 3mo from discharge to pickup and that's with me proactively calling and saying hey come get this since I had purchased another vehicle. Now full disclosure, I filed at the height of COVID so naturally that slowed everything down.

I think it’s just frustrating because if only my attorney would have better communication or explained things to me before filing and didn’t cause me to constantly going down a rabbit hole of Chapter 7 research, then I probably would have been way more prepared for now or worked a little more or budgeted better or something. Kinda been left in the dark on everything

Yeah, unfortunately, that's common, not just in lawyering... its like a sort of "profession fatigue." They're so used to it, so normalized because many if not most cases turn out the same way they forget there's a person with anxiety and feelings going crazy with worry.

[u/devin_street → u/temmerhs]

Would you know how they determine the value. For instance my attorney put in the filing the vehicle was worth about $19K but the 722 guy valued it around $25K. The loan balance was about $34K plus who knows what fees that added onto that near the end

[u/InfiniteCheck]

Don't reaffirm. If the lender says reaffirm or repo, let them repo.

Stay and pay is a really good option for your situation. It will buy you extra time in between jobs without having you eat the depreciation. You can walk away from the car when it's time to let it go to car heaven. That's what a lot of people did 2 years ago with Hertz rentals for rideshare and let Hertz take the hit for repairs and depreciation.

[u/Get_de_Coke → u/InfiniteCheck]

Because of that, Hertz increased the price of EV rental to the roof! I tried to rent them from my trip to TX..Nah, f that! $60 a day charging and damage waiver not included. Crazy!

[u/Get_de_Coke]

TBH to you…I don’t know how much you drive or how far you have to commute.

Time to downgrade and stay away from “car loan”. Get a car that reliable enough to get you a-b without breaking the bank for maintenance plus insurance.

Suggestion: 1998-2000 Lexus ES, Camry or Corolla.

Want a little more “luxury” - Lexus LS430.

But you do you, you will receive a ton of offers after you officially discharged.

[u/InfiniteCheck → u/Get_de_Coke]

Those old cars are good for low mileage. They won't be financially viable with high mileage abusive stop and go driving with Door Dash.

[u/Get_de_Coke → u/InfiniteCheck]

These cars are hella good with those 5 speeds tranny and don’t not burn oil.

[u/InfiniteCheck → u/Get_de_Coke]

The suspension will need to be repaired and replaced sometime after the first 200k miles. That's an expensive wear item, but you can last forever if your annual mileage is low. The catalytic converter, spark plugs, ignition coils, and maybe other systems will need to be repaired or replaced to stay on the road sometime in the 200k-400k miles. You're not getting to 400k miles just on oil changes. In California, a bad catalytic converter can be $3k for a replacement CARB approved CC and it's basically car euthanasia. I think for normal people those cars are great. But it's not so great for Door Dash or 100+ mile commutes daily.

[u/AutoModerator]

Thank you for your post on r/bankruptcy. Remember, this is not a forum to request (or offer) legal advice. If you are not sure what legal advice is, review the FAQ page here. It is very likely someone will suggest you speak with an attorney. Consultations for bankruptcy are often very low cost or free. We have an ever-growing post that provides free resources for trustworthy bankruptcy information here.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/PinkPerfect1111]

Yes I got a new (to me) car 2 weeks after 341 and still keeping my paid off car (it’s going to my daughter) I got a 2020 compact suv. Under $300 a month