Bankruptcy and Vehicle Financing



  • mazdaprofourmazdaprofour Member Posts: 202
    Thanks guys...I shall wait
  • flog66flog66 Member Posts: 4
    I've just sat here for a couple of hours and read your entire story from the very beginning of this discussion topic to the end. I was disgusted with all of the negative posts toward you. Especially the ones that couldnt wait for your plans to fail. Most of them wanted to be the ones to say "I told you so". I just wanted to say that I'm happy for you and I'm glad that things have turned out well. You seem to be on the right track once again. Best of luck in the future!!!
  • bretfrazbretfraz Member Posts: 2,021
    I have a friend thats taller and heavier than Mookie. He bought a current gen. Maxima and fits just fine. Well, as fine as a 387lb guy can fit into a car........
  • flog66flog66 Member Posts: 4
    Thank you for continuing to post about your experiences right to the end even though you were getting ridicule and abuse right from your very first post. Most people would have just said screw this and wouldnt have bothered as I'm sure you were tempted to do at times. Your information will be helpful to many people and it's people like you who make this discussion board worth using. Thanks.
  • lokkilokki Member Posts: 1,200
    "I just wanted to say that I'm happy for you and I'm glad that things have turned out well. You seem to be on the right track once again."

    " Financed 14,300 after down payment and got 19%"

    60 months @ 6.99 % = $283.09 ea month total cost =$16,985.38

    60 months @19.00 %= $370.95 ea month total cost =$22,256.99

    $1,054 per year difference for 5 years.
  • black_tulipblack_tulip Member Posts: 435
    "$1,054 per year difference for 5 years. "

    But then, he didn't have to pay 42K that he owed to his CC companies :)
  • mazdaprofourmazdaprofour Member Posts: 202
    Thank you for the positive comments. I am glad to be back on track and am not planning AT ALL to dig myself way back into debt. I will refinance the car after the first year. Thanks all
  • tblazer503tblazer503 Member Posts: 620
    My local CU is doing 36-72 mo loans 100% financed @ 4.99% =o)... there's more savings...

    But, It's the price mazda pays for what he did. At least he wasn't horrified as he expected to pay more interest for his "blemished" credit. Ironically, Equifax says if I file bankruptcy, I will have a mid 600 beacon score... interesting... =oP

    I guess thats what bankruptcy is for, and since they are getting rid of chap 7(?) it will make it less feasible in the near future for anyone to file bankrupcy, as they will not be able to avoid their debts, just have protection against their debtors temporarily. They will still have to pay back everything.
  • lemkolemko Member Posts: 15,261
    ...there's still two other alternatives to Chapter 7. You can either kill yourself or flee the country to avoid paying your creditors. I find this rather sad because a guy could have severe medical problems that wipe him out financially. He now can no longer hope for a new start.
  • abtsellerabtseller Member Posts: 291
    through a similiar situation. He is a normal guy under 30 years old, a computer guy (contractor). He is single, healthy, runs several miles a day, etc. This would be the model for someone who doesn't need health insurance, right?

    He is now facing over $50k in hospital bills because he had to get 2 valves replaced in his heart (birth defect led to an infection).

    The hospital says they will finance the bill at 20% interest. He has no credit, no assets, he lives in an apartment, etc.

    He makes ok money, so he could make payments for 20 years. He could also wipe out his parents life savings. He could also file Ch. 7 and walk away clean.

    How's that for an interesting ethics quiz?

  • cfg1cfg1 Member Posts: 85
    When are they getting rid of chapter 7?
  • rubicon52rubicon52 Member Posts: 191
    who is thinking about filing chapter 7. He plans on buying a car (financing) while the chapter 7 is in progress (before discharge). Does anyone know if any financial institution will finance a car sale for someone filing chapter 7, but before discharge? How about the "buy here, pay here" places? Thanks.
  • abtsellerabtseller Member Posts: 291
    debts to the court. If he does not, and they find out, they can void his bankrupcy. He absolutely cannot/ should not do anything until after his BK has been discharged.

  • isellhondasisellhondas Member Posts: 20,341
    If your friend is about to go BK, he probably has bad credit and won't be able to get financing anyway.
  • mazdaprofourmazdaprofour Member Posts: 202
    rubicon, I do not care what the lawyer/dealership tells you, I do not know or have heard of any legitimate bank financing you till you have your discharge letter in hand. Even though my bankruptcy was discharged, the dealerships wanted the letter and needed to fax a copy to the bank for the bank to even consider me. I was told by my lawyer that I can go out and get a car the day after my court date, but soon found that to be very untrue. YOU MUST HAVE THE LETTER.
  • lemkolemko Member Posts: 15,261
    I'm sure everybody's seen or heard those ads for credit counseling. I was surfing the net last night and came across an article telling the consumer to beware of credit counseling agencies. The article stated that there were a lot of hidden fees and that in reality the credit counseling agency is nothing but a debt collection service for your creditors. Creditors don't mind dealing with these agencies for they figure they will get more from you via the agency than if you declared bankruptcy. A portion of your minimum payment goes toward the credit counseling agent.

    The way it works:

    You sign up with the credit counseling agency. You pay the agency a certain monthly payment which it then distributes to your creditors, much like a collection agency.


    Sometimes the agency fails to pay your creditors. As a result more late fees and penalties are tacked onto your debt. Your credit report will show "Under Debt Management" which gives your rating a black eye.


    The article wasn't completely negative. It states that going to a credit counseling agency is better in the long run than filing for bankruptcy, but all in all it sounds like a very last resort.
  • abtsellerabtseller Member Posts: 291
    there are many volunteer organizations that will provide the same service without hurting your credit. The bottom line with all of this is that a lifestyle change is required to get people out of the debtor mentality. You have to break the debt cycle, or they will be there for the rest of their lives.

    Consumer counseling is definetely one step away from bankrupcy. These "stop the collection calls, slash your monthly payment" infomercials make me want to throw something at the TV.

  • andre1969andre1969 Member Posts: 25,327
    ...when I went on CCCS, I had a few problems, but nothing too major. First, some of my creditors agreed to a certain monthly payment, but then upped it at the last minute. That threw my minimum payment off a little, but really didn't matter since I tried to over-pay, anyway.

    My biggest problem was with Signet Bank (I forget what they're called now). Well, they supposedly agreed to this CCCS stuff, but then I started gettnig late charges if CCCS was late. I made sure to pay them off immediately, as soon as I found out. I also got them back, too. They made this offer where if you'd open a checking account with $500.00, they'd give you $100.00. All you had to do was keep the account for at least 30 days. Then I closed out the account. Wouldn't it be nice if you could make a 20% return in 30 days on the stock market? ;-)

    On the plus side, though, CCCS did save me a lot in interest payments! Some of my creditors wiped out the interest charge completely, so the payment was all principal. Others dropped the rate considerably. I think I figured that on average, going with CCCS ended up costing me about 7-8% interest, which is a lot better than 17.9-19.8% or whatever! This was back around the time that 20% APRs were just starting to show their ugly heads, I think. The first time I ever heard of anything over 20% was with Best Buy. I think their rate was 21.6% back then. I'm sure some of 'em are worse now, though!
  • abtsellerabtseller Member Posts: 291
    is that you can arrange payment plans and cut the interest/ penalties yourself. Of course most people don't have the stomach to haggle with the credit card people when they feel that they're negotiating from a position of weakness.

  • lemkolemko Member Posts: 15,261
    ...carry the worst interest rates. I have a Sears card because I like the Craftsman tools. If I need a certain tool I get it at Sears and use their card but pay it in full when the bill comes.
  • andre1969andre1969 Member Posts: 25,327
    yeah, I found out about that AFTER I went on CCCS. In the long run though, CCCS did still save me a lot of hassle. I had about 12 or 13 credit cards that I turned over for them to handle. It was nice to only write one check a month instead of 12 or 13. Well, money order, actually. I guess they're smart enough to know that if you got yourself in enough of a jam to use their services, then any checks you write out might not be the most, um, reliable! I figured I saved a few bucks a month just in postage!

    I remember one time though, I had to call one of the banks for some reason or other. Well, I had two cards with this bank. CCCS had negotiated one of them down to 10% and the other to 12%. The customer service rep noticed this and, on the spot, dropped the second one down to 10%. See, the banks and CC companies can have a heart, sometimes!

    Back then, CCCS was a free service, but I think they charge nowadays.
  • mookie14mookie14 Member Posts: 252
    as i said before um i will have like $2800.00 worth of lease pymts left on this lease. im wondering will i be able to get in a used tahoe like 2001 under 19000 miles. or a 03 trailblazer income like 50k all credit cards will be paid off. as before bk in 96 current lease never been late also with credit cards. also in feb will have been on job like 8 mths wife a yr 9-11 did this huh so anyone???????
  • mookie14mookie14 Member Posts: 252
    anyone? better yet it is a little bit more like 3888.00 so will anyone answer??????? thanks mazda wuz man help me man.
  • abtsellerabtseller Member Posts: 291
    its hard to answer the question if you don't understand it.

  • isellhondasisellhondas Member Posts: 20,341
    Glad I wasn't the only one!
  • mookie14mookie14 Member Posts: 252
    message 623 thanks.
  • gmanusmcgmanusmc Member Posts: 699
    gotta be kidding!
    2016 ES350 Lux/Atomic Silver
    2017 Accord Sport CVT Mod Steel Metallic
  • rroyce10rroyce10 Member Posts: 9,332
    .... The new BK legislation folded last week in the House, so the BK laws will stay the same ..

    I had feeling when Mr. Lerner passed away, that would end it for a long time ...

  • isellhondasisellhondas Member Posts: 20,341
    I'll bite my tongue and refrain from further comment.
  • hicairahicaira Member Posts: 276
    The irony is that it was scuttled not by the Democrats and the lawyer lobby but by the Republicans! To simplyfy things a bit: A small group of Republicans wanted to add language that would allow abortion protesters to be able to still file chapter 7 to obviate any fines imposed by the courts. Moderate Repubs and many Dems opposed this selected exclusion and the result was stalemate.

    And here I thought it was the Democrats that formed firing squads by standing in a circle....

  • brianw220brianw220 Member Posts: 38
    There was a lot more to that legislation ending than what you mentioned. In fact, what you mention is a small side-story.
  • afk_xafk_x Member Posts: 393
    Lenders don't want people to go BK then they should make smarter lending decisions.

    Too bad the senate is apparently owned by large creditors...not too surprising I suppose...

    But then again, the public believes the myth that BKs cause all of us to pay higher rates
  • lemkolemko Member Posts: 15,261
    ...might also force an otherwise law-abiding citizen into criminal acts of desperation if he has fallen on hard times. Not all bankruptcy is thre result of a spendthrift lifestyle. Most people fall into bankruptcy due to unemployment, medical issues, business failure, or other unfortunate circumstances.

    Some people with less willpower may fall into the credit trap. How many credit card offers do you receive in the mail? I throw away at least three a day. Some burden of responsibility should fall onto the lender as well.
  • lokkilokki Member Posts: 1,200
    A report in the WSJ recently said that subprime lending is where the big bucks are for the lenders. Sure, you lose a lot of bucks on the borrowers who don't pay off, but in general it's still more profitable than lending to people who pay on time every month. Thus the banks -agressively- pursue loaning people who are less than perfect credit risks.

    If you're charging someone an additional $5,000 on a 5 year loan - above what you'd normally charge - you can still make money even if some loans aren't fully paid back.

    The article says that this is true in good times, but can really do damage to a bank if the economy gets too bad too fast; then if the bank has too much exposure they can get burned if a bunch of their subprime customers stop paying within a short period.

    The question in the article was whether banks were recognizing the trends in the economy and reacting properly to them. When the economy starts going bad then the loans to subprime should start becoming limited. Of course, no bank manager wants to cut profits too soon, so they're out there taking chances.
  • bretfrazbretfraz Member Posts: 2,021
    From Lemko: Some people with less willpower may fall into the credit trap. How many credit card offers do you receive in the mail? I throw away at least three a day. Some burden of responsibility should fall onto the lender as well.

    From Lokki: The question in the article was whether banks were recognizing the trends in the economy and reacting properly to them. When the economy starts going bad then the loans to subprime should start becoming limited. Of course, no bank manager wants to cut profits too soon, so they're out there taking chances.

    One startling thing I've been experiencing lately is the massive sales push to get customers to open a charge account at every retail chain imaginable. The full court press from places like Home Depot, Lowe's, the warehouse clubs, discount stores, you name it, is flat amazing. And if it's not a charge card its "loyalty accounts" I'm being pressed to open. Should I really open another finance account with another retailer just so I can buy a furnace filter or a magazine?

    I know the push is coming from two places: Retailers who are desperately trying to hang on to their customer base by giving them "discounts" if they stay loyal; credit card issuers who are cutting sweet deals with retailers in order to boost the number of high interest account holders to make up for lost profits elsewhere (i.e. the stock market).

    I agree 110% with Lemko when he states that lenders have to accept some responsibility for the massive over-extension of easy credit offered to Americans. People are going to do whatever they have to do in order to make ends meet. And if that means taking advantage of desperate credit issuers in order to stay afloat, they're gonna do it. It's terribly hypocritical of credit issuers to bombard consumers with an overdose of applications and offers, then turn around and coerce legislators to tighten bankruptcy laws so they are not made to pay the price for actions they played an instrumental role in.
  • isellhondasisellhondas Member Posts: 20,341
    I agree to a point that lenders have *some* responsibility.

    Still, that kinda leans toward the "it's not my fault" way of thinking.

    Last week when I went into Home Depot, the first thing I saw was a large table covered with items that a person could pick from simply be filling out a HD credit application.

    I could have picked from a nifty flashlight, small tool kit and a couple of other items.

    The person manning the table was trying hard to attract the attention of people entering the store.

    Then I came home and opened the mail. I probably threw out two or three credit card offers.

    I still say it boils down to personal responsibility in spite of the temptations.
  • mney6mney6 Member Posts: 116
    We had a customer in yesterday who had 80000 in credit card debt with 35000/income.
    Got upset when we his interest rate was at 5.9 percent and I couldn't get him 3.9 percent.
    Yet he doesn't have a problem paying his minimum payment on his cards at 17 %
  • lemkolemko Member Posts: 15,261
    Is that $8,000 or $80,000? If I had $80,000 in credit card debt, the last thing I'd be thinking of is a new car. At an annual income of $35K, you'd need a mortgage to pay off $80 grand!
  • mney6mney6 Member Posts: 116
    80,000 is the correct amount.
  • hicairahicaira Member Posts: 276
    That can't be right. I mean, most credit cards charge a minumum percent of the balance a month, between 2% and 5% of the principle. Even if his average is 2%, and he is only staying even (not increasing his balance), about 1/2 of this guy's gross is going to the cards. And he thinks he can afford a new car?

    Out of curiosity, what was he trying to buy?

  • mney6mney6 Member Posts: 116
    He was trying to buy a 2003 Sentra.
    He kept rolling his balances to the next card for those short time low interest offers.
    Instead of closing his account on the one,he would use it since the other one was maxed out.
  • isellhondasisellhondas Member Posts: 20,341
    Is probably one paycheck away from bankruptacy.

    I've seen the same thing. Once a customer had something like 88,000 on revolving accounts.
  • andre1969andre1969 Member Posts: 25,327
    ...can work, if you use a little discipline. About 3 months ago, I put $2800 on a credit card that had a 0% offer. After the December statement, it goes up to 14.9%. Well, as luck would have it, I just got another offer in the mail. Another card I have is offering a 4.9% balance transfer rate, good until the balance is paid off. I immediately transferred the remainder of that balance, which is about $1900.

    I have no intention of using the first card anymore though, and I guess that's where a lot of people would get into trouble.
  • andre1969andre1969 Member Posts: 25,327
    When I used to work in retail, we were supposed to push applications for our store card on the unsuspecting public. In fact, they tried to drill it into our minds with this "One for Twenty" crap. Meaning, we got one application filled out for every 20 hours we worked. We got $2.00 for every one we got a customer to fill out, and it did count on our performance evaluations. I forget how much it counted though...I'm guessing not much, because I always got a pretty good raise.

    I never tried very hard to push these applications on people, mainly because I just couldn't do it with a clear conscience. I had a card myself, but only because we got 20% off most things in the store when we, as employees, used it. But then the apr was 19.8%, and I'm sure they were counting on most people to just pay the minimum.

    We were also in not the best neighborhood in the world. Kind of a "just lookin' outta the window, watchin the asphalt grow. Thinkin' how it all looks hand-me-down (Good Times)". Lots of people with not much money. Older people on fixed incomes, people out of work, etc. Lots of folks just making it from paycheck to paycheck. The last thing they needed was a card with 19.8% interest, even if they did get 10% off their first purchase. I also hated making people go through the hassle of filling out the application, having them wait while I phoned it in, only to be told they weren't approved.

    I wonder if these stores would change their ways if customers started complaining to management? I never pushed these cards very hard myself, but I remember some of my co-workers would really get on the customers' nerves, hounding them to sign up. I know it irritates me when I get hounded to sign up.
  • KCRamKCRam Member Posts: 3,516
    Let's not stray too far from bankruptcy and credit as it pertains to buying a car. While the debate about responsibilty in credit card solicitation is intriguing, it's off-topic here at Edmunds.

    Smart Shopper and FWI Message Boards
  • fezofezo Member Posts: 10,384
    Whatever became og this topic?

    Mazda, how's it going? Still on the straight and narrow?
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • johnannettejohnannette Member Posts: 5
    yes how are things going is the car doing.
  • saturnfansaturnfan Member Posts: 40
    IMHO, the new legislation is a sellout to the credit grantors who choose to grant credit to folks who don't justify it.

    Years ago, the banker did you a favor saying "no" when your budget really didn't support the new monthly payment. Now, they simply feed you credit until you choke. If you max out a card but still make the minimums, up goes your credit limit.

    Bankruptcy is based in the Bible and, when properly used, keeps people from a lifetime of suffering and involuntary servitude for debt. These days, with millions losing health coverage, anyone can get way behind the 8 ball through no fault of their own. When I was laid off in 1989, the company notified me that under COBRA, we could keep health ins @ $600/mo. Great when unemployment paid $800/mo. Nice to be the healthiest family on the street, eh?

    Yes, some people do abuse bk. No, we don't need to hurt everyone for this reason.

    Back to the subject, as our moderator would say. It's not the end of the world to file bk, and you can most certainly finance a car after bk as long as you have a decent income and behave after the bk's discharged.

    Best wishes to mazda and all of our friends from a 1989 bk survivor who's Beacon score's now 700+ and is driving an 03 Corolla.
  • ohioguy45701ohioguy45701 Member Posts: 1
    Here's what I did after my bankruptcy:
    My then-auto financier wouldn't reaffirm my car,leaving me without wheels ( I refused to keep paying for the auto without a reaffirmation), so I financed a used $6800 auto with a thousand down through the dealer's in-house financing. This was at a steep interest rate, like 18%, but the payments were cheap because of the low principal. I chose a dealer that would report to the credit bureau my payments each month. I diligently paid on the loan for a little over two years, including making double payments some months. By that time, my credit score had recovered by over 100 points (from 590 to 705). While the bankruptcy was still on my record, the fact that I was making payments on-time, took on little else in debt, and had recovered much of my score meant it had little impact on my next car purchase. I was able to finance my next car ( a new one this time)through a major lender , at 8%.
    If you can PROVE that you've changed, and that the debt-filled life you once led is now over, lenders WILL give you another shot. Just don't expect it immediately.

    As for all the moralizers, America is NOT a debtor's prison, and there are many things that can happen in one's life that lead them into the darkness. Just because one is bankrupt financially doesn't mean they are bankrupt morally. Job loss, medical bills, frivolous lawsuits can almost make anyone file for Chapter 7. I'm glad we live in a country that gives people another chance. Always remember that most of us are only a paycheck or two away from the homelsss shelter.
  • abtsellerabtseller Member Posts: 291

This discussion has been closed.