Should I surrender a car after bankruptcy if the payments are too high? 22 Answers as of August 20, 2012

My bankruptcy was discharged 5 months ago. I didn't reaffirm my car loan through the credit union. I want a new car since my payments aren't helping rebuild my credit and well just because I want a new car. Since I'm upside down $6000 can I surrender my car and just get a new loan for a different car? The payments are too high trying to roll that much extra money onto a car. I realize I'd pay a much higher interest rate, but I'd get a better car and rebuild my credit. But can I simply surrender it since I'm current and have auto payments?

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Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
If you received a discharge and did NOT reaffirm the debt on the car then you can allow it to be repossessed or return it to the lender with no deficiency owed. Tthe debt is discharged and the lender only retains their security interest which is the car only. They can take that from you, but any additional money owed on the loan, beyond the actual value of the car, is discharged. Before you quit making payments on this vehicle and lose it you might make sure you can qualify for another car loan at this stage of the game. You wouldnt want to find out that you dont qualify for a car loan yet after your current vehicle is gone.
Answer Applies to: California
Replied: 8/20/2012
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
Absolutely. If you did not reaffirm your debt, you can walk away from the car (i.e. return it) without further obligation.
Answer Applies to: California
Replied: 8/20/2012
Stephens Gourley & Bywater | David A. Stephens
If you did not reaffirm the debt you can surrender your car. You may or may not be able to purchase another car depending on your credit.
Answer Applies to: Nevada
Replied: 8/16/2012
Steven Alpers | Steven Alpers
This may cost your credit rating even more.? This needs a consultation you need to discuss how long your current payment plan is and your finacial condition but you have not reaffirmed the debt so you are in better shape .? It may be necessary to file a chapter 13.
Answer Applies to: California
Replied: 8/16/2012
Charles Schneider, P.C.
Charles Schneider, P.C. | Charles J. Schneider
If you have never reaffirmed the debt you don't owe the car loan.
Answer Applies to: Michigan
Replied: 8/16/2012
    Attorney At Law | Harry D. Roth
    The $6,000 under water is a real clue. Lose the car. The hard part is the new one. One of the reasons you got into trouble is that you spent too much on a car.Getting a new car because you want one and paying through the nose in interest is not a good move.The car you buy and the deal you get, including the interest rate, is going to have a lot to do with your future financial health. And remember that if you don't like this one, you don't have bankruptcy to fall back on.
    Answer Applies to: California
    Replied: 8/16/2012
    The Michigan Bankruptcy HQ
    The Michigan Bankruptcy HQ | Joseph P. Saulski
    Short Answer: As long as the original loan was not reaffirmed you may surrender the vehicle without any further obligation. Discussion: The petition of bankruptcy includes a Debtor's Statement of Intention that describes what the debtor intends to do with property that is encumbered by liens and/or unexpired leases. If the property is retained, there are 3 possible options: (1) redeem the property; (2) reaffirm the debt; or (3) other. If the property was redeemed, there would be no continued payments to the creditor as the property would be owned outright by the petitioner. If the debt was reaffirmed, the legal obligations for full repayment (either if there is a deficiency after surrender or repo) continue after bankruptcy discharge. Often, the debtor will select Other in order to avoid reaffirming but keep the property. Normally in this situation the debtor will explain on the form that they intend to retain and pay. In this circumstance, the debtor will continue paying on the terms of the loan agreement, but not reaffirm the agreement. If the creditor does not object to this arrangement by demanding surrender or reaffirmation (far more likely if the property is underwater), then the creditor will not have the ability to go after the debtor if they default on payment. However, the creditor will always retain its lien on the property and upon non-payment may repo the property. In this particular situation, if the car loan was not reaffirmed the debtor has no contractual obligations to continue the payments and may surrender the vehicle without any further liability.
    Answer Applies to: Michigan
    Replied: 8/16/2012
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    Usually a creditor won't allow you to keep the car if you didn't reaffirm. I would just call them and tell them that it was discharged and you want to surrender it. Expect that you will probably pay a much higher rate on a different vehicle, and if you are causing the CU a loss, they likely will close any accounts you might have with them, because you will no longer be a member in good standing. Good luck!
    Answer Applies to: Michigan
    Replied: 8/16/2012
    Debt Relief Law Center | Roger J. Bus
    If you did not reaffirm on the debt after your bankruptcy was filed, then you can give back the vehicle and not be pursued on a deficiency balance as the debt was discharged.
    Answer Applies to: Michigan
    Replied: 8/16/2012
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    In the absence of a written reaffirmation agreement approved by the bankruptcy judge you can surrender your car and owe nothing.
    Answer Applies to: California
    Replied: 8/16/2012
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Yes, you can surrender it now if there was no reaffirmation agreement.
    Answer Applies to: California
    Replied: 8/16/2012
    Bordeaux Law, P.C.
    Bordeaux Law, P.C. | Clifford Bordeaux
    Yes. You can surrender the vehicle without further liability if you did not reaffirm. If the credit union reports this is a repossession on your credit report, you should be able to have the notation removed since you do not currently have liability for the loan.
    Answer Applies to: California
    Replied: 8/16/2012
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    Yes you can surrender the car and if you did not reaffirm the debt, then it should not show on your credit for any surrender.
    Answer Applies to: New York
    Replied: 8/16/2012
    CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE).
    CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE). | Gary Lee Lane
    Not if you did not include it in the bk which seems you did not.
    Answer Applies to: California
    Replied: 8/20/2012
    Bruning & Associates, PC
    Bruning & Associates, PC | Kevin Bruning
    The important thing in determining whether you can surrender your car after bankruptcy is whether or not you reaffirmed the debt. Since you did not reaffirm, your consequences for surrendering the car are minimal - the credit union cannot come after you for a deficiency, even though the value of the car is less than the loan, and your credit report is not implicated due to the recent bankruptcy and discharge of personal obligation. The issue, however, is surrendering the car. You would need to contact the lender in order to determine what they want to do in order to re-take possession, and you would need to discontinue the automatic payments immediately. If you discontinue the automatic payments, eventually the credit union will probably decide to repossess the car on its own, but if you want to avoid having to wait, you should see if you can arrange an amicable surrender so you can predict when exactly it will happen. Keep in mind that, due to your bankruptcy and decision not to reaffirm, the credit union is allowed to repossess your car at any time if bankruptcy is considered a material default under your original car loan (it often is). So if you miss a payment, they may decide not to wait and repossess your car immediately - do not be caught off-guard if you decide to miss a payment, and make sure you have other transportation arrangements in place beforehand.
    Answer Applies to: Illinois
    Replied: 8/16/2012
    Law Office of Pho Ethan Tran PLLC
    Law Office of Pho Ethan Tran PLLC | Pho Ethan Tran
    As long as the debt wasn't reaffirmed, you can surrender the car to the creditor since the debt was discharged by the court.
    Answer Applies to: Texas
    Replied: 8/16/2012
    Law Office of Stuart M. Nachbar, P.C.
    Law Office of Stuart M. Nachbar, P.C. | Stuart M. Nachbar
    IF you did not reaffirm the car, it depends on what the statement of intent was in your petition. Usually, that is determinitive, but, w/o a reaffirmation, you should be able to surrender.
    Answer Applies to: New Jersey
    Replied: 8/16/2012
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    The best person to ask is your bankruptcy attorney. If you have no attorney we could review the paperwork and render an opinion.
    Answer Applies to: Michigan
    Replied: 8/16/2012
    R. Jason de Groot, P.A
    R. Jason de Groot, P.A | R. Jason de Groot
    As long as you did not reaffirm the debt the creditor cannot come after you for a deficiency judgment. Make sure you can get a new car loan before you turn the old one in.
    Answer Applies to: Florida
    Replied: 8/16/2012
    Diefer Law Group, P.C.
    Diefer Law Group, P.C. | Abel Fernandez
    If you included the car in your case, the bankruptcy would discharge you of personal liability. If you did not reaffirm on the vehicle, you could surrender the vehicle. If it is set up on automatic payments you might want to cancel the payments.
    Answer Applies to: California
    Replied: 8/15/2012
    Bensamochan & Poghosyan LLP | Eric Bensamochan
    Since you did not reaffirm the car loan through your chapter 7, if you surrender the vehicle now, you will be liable for any deficiency balance that may follow.
    Answer Applies to: California
    Replied: 8/16/2012
    Wajda Law Group, APC
    Wajda Law Group, APC | Nicholas M. Wajda
    If you are sure that you did not reaffirm the loan, you can surrender the car at any time and you will owe nothing for it.
    Answer Applies to: Nevada
    Replied: 8/15/2012
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