Bankruptcy and Vehicle Financing

alfox · June 2002

"...avoid creating indentured servants who can never become free of their debt load." Agreed, but the number of such cases are much smaller than the number of people availing themselves to bk.

If we're trying to avoid people from becomming "indentured" through circumstances largely beyond their control (former Enron worker whose son has Lukemia, crash victim unable to work, or even the victims of a serious shift in the economy) then I agree.

If we're trying to help people who cannot make the connection in their minds between the ease borrowing and their own responsibility for repayment, then I think the process should be a bit more painful. It should almost always involve some element of repayment balanced with a degree of penalty. The notion that someone who has everextended himself to the point of insolvency should be able to have all his debts discharged and then buy a new car is mind numbing, and inherantly wrong, IMO.

mazdaprofour · July 2002

Well folks as promised, here is a update. I got a copy of the bankruptcy papers in the mail. I filed bankruptcy on jun 22 and got my hearing letter a few days ago. They did exempt my 1993 sable out along with all my possessions so on the hearing papers it states to the creditors that nothing can be sold to pay off some of the debts. They set my date at the end of this month. I was surprised at how early that they set the court date. It also states that the case will be discharged at the end of September.

alfox · July 2002

Hope it all works out in the long run. None of your choices were easy ones.

:-)

saturnfan · July 2002

Sounds like your filing went through just like mine, no asset case with a 90 day window before discharge.

Considering what brought you to the bk court, looks like you've profited from the experience and will do better from now on.

Best wishes

mazdaprofour · July 2002

I appreciate you guys support. I will go on the 24th and hope that everything goes ok. I will fill you guys in around that date.

black_tulip · July 2002

Considering what brought you to the bk court,...

Irresponsibility?

afk_x · July 2002

Let he who is without sin cast the first stone

alfox · July 2002

We're not talking absolution here, just responsibility for one's own actions. If you want help with the afterlife, go to church. If you want credit here on Earth, pay your bills.

lleroi · July 2002

of overeating.The car industry,like all businesses,it our society promote overindugence.The over eaters are encouraged to join Weight Watchers(another business);this calls for a sacrifice on he part of the overeater.The sacrifice in the case of the "overeater"(individual who declares bankruptcy)is higher new car interest rates.Some may look upon it as a irresponsible act and want to punish the people with BK's.I just see it as a natural consequence of our economic system.The higher interest rates and credit restrictions that occur after a BK are just business decisions and are not a reflection of a person's morals or ethics.

alfox · July 2002

overeating as the fault of business marketing, and bankruptcy as the fault of lenders, you doom yourself to being fat and poor.

Why not stop blaming everyone else and take charge of your own life? Aren't you really smarter than sucker ads? Or are you THE target demographic.

Geeeze!

lleroi · July 2002

The BKeer does not get a free ride.He pays for the BK,he pays more for future credit.A person or company that sells money bears at least 50%of the responsibility for "bad" loans.That's what interest rates and credit ratings are for.A car loan is probably one of the best bets a creditor can make.The person with a poor credit history will have to put down a larger down payment as well as paying a higher interest rate.If he defaults there is some value in the repoed car.If someone loans too much money on the car-well thats bad business.

I'm in a wholesale business,like car manufactuers,I must get my product out there.I rely on my dealers to make wise choices so they can continue to buy my product.When times are uncertain I ,as well as my dealers, must take risks.Just because someone goes BK does not mean I can afford to loose his future business-it will just have to cost him more.

The circumstances of the BK are much more imp to me then the BK itself.We all make bad decisions in some areas-money being the most common.Premeditation rather then overextension is what I look for.This can usually be determined quickly.

As far as being doomed to being fat and poor;look around you,it's happening.I guess in an ideal world all-u-can-eat buffets would refuse service to an obese person.Here again it's just business.

alfox · July 2002

"I guess in an ideal world all-u-can-eat buffets would refuse service to an obese person."

In an adult world, people control what goes into their own mouths. Corporate bankruptcies are a different animal than personal, as are personal ones that result from circumstances beyond an individual's control. But the pervasive and growing perception that "my debt is the fault of the lenders, but I can wipe it clean with bankruptcy and get a fresh start...." is utter nonesense, and simply feeds the current I'm-a-victim, screw-big-business view of life in America.

KCRam · July 2002

For the last time...

Cease the morality postings. Further posts of this nature will be sent to senior management for suspension review. Is that clear enough?

kcram
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afk_x · July 2002

Just this week I sold several cars to people with prior BK's.

The first had a BK 5 years ago - now has a score of 697. Sure there are some banks that won't touch this person but for the most part they can get the same rates as someone who never filed BK.

The second had a BK 3 years ago. Score was 667. Still has to pay a little higher rate than your best credit people but can still get low rates.

The third had a BK 8 years ago - was concerned about his credit because of it. 750 score - computer approved for tier one rates.

mazdaprofour · July 2002

Hey folks, like I have stated 1000 times. Lets keep the moral issues to ourself. This is a CAR related website. I would hate to see this forum go away do to some moral police. Thanks

alfox · July 2002

;^)

lemko · July 2002

...don't get something like a Kia. You'll immediately be upside-down on the loan and in an infinitely worse financial condition. I'd buy a relatively trouble-free used car or hold onto the Sable for as long as possible. Did you ever think of going to an auto auction? A co-worker bought a really nice car at the auction for only $800 and she still has it five years later! I might consider going there the next time I'm in the market for a beater.

isellhondas · July 2002

These "auction" cars are often rejects from the car dealer's lots. If they were, indeed, a bargain most of them wouldn't be there in the first place.

saturnfan · July 2002

Filed Ch 7 in 1989 after a 6 month layoff, moving to NC from LA, and having to walk away from a house since even Mickey d's had a long waiting list.

In 1992, got approved by Ford Credit at 14%. In 1994, traded for a Mazda at 9.5%. In 1996, got a Saturn at 9.25%, and got all tier 1 rates from then on.

Bk is off credit report now and was approved for my new Corolla at 6.5% by a conservative local bank.

As we see, it does hurt your credit for a few years, but you can rebound if you keep your finances in order. In the beginning, only "bottom feeders" wanted to give me a credit card, but now have no problem. Keep 1 Visa with my bank, $1,500 limit, and pay in full each month.

Hope you do as well, mazda. Best to you and your family.

Bob

andre1969 · July 2002

A few years ago, a co-worker of mine got a car for her son at an auction. It was a 1981 Olds 98 with a 307. Gorgeous looking car, but it proved to be extremely troublesome. I think they only paid $500 for it, so it wasn't too much of a loss, I guess.

fezo · July 2002

Hi, guys.

While I apreciate the moral debates and such I understand that we're ona car site here.

I really applaud mazda for keeping us up to date on this. It would have been really easy to duck the whole thing when the debate got ugly. I've certainly learned more about the subject than I ever suspected I would - or would even want to! Most interesting is the fact that it seems either way you go you can recover if you're serious about it and that it's a more complex decision than I would have thought.

That said, I'll tell you - getting that score up once you are in the clear buys ou a lot of freedom - mostly because it gives yo back the decision making power on where your money goes. Example - the reason I've been away was I've been in China picking up an adopted daughter (daughter number 4 - first adoption). I could not afford the cost and borrowed on the equity on my house. It was there because I was careful to have it there. You'll enjoy that kind of freedom when you get there - others here can agree on that.

Best of luck, mazda - keep us posted as it goes along. You have made some good decisions based on what advice you've gotten here which is the whole point of this. Hope the Sable holds up - that will really help! And you have options laid out now if it doesn't.

mazdaprofour · July 2002

Fezo, congratulations on the adoption. I hope you and your children have a wonderful life. Adoption is a great act in my eyes. You have to be a very kind person to take a child into your heart and make them yours best of luck.

I am still awaiting my court date (July 24th). The interesting thing is that I got a letter today. It looked very official. It said "we have been notified of your chapter 7 filling. We wanted to give you the opportunity to purchase a vehicle from us at a substantial discount, buy you must purchase prior to your 341 hearing". This is a nice scam...I did not know that the courts made filling information available to outside companies. I guess these guys check with the courts to see who has filed recently and try to target them. The bad thing about this scam is that you can not buy a car if you have just filed until your hearing or the case can be thrown out. But I guess a few people fall for this trick. I tore it up. With a few days left, I am getting excited to get this over with. The sable is holding up so far. After my hearing is over, I am going to open my photography business in atlanta. I will have to look at a new vehicle. The lab that I print my film with is 30 miles from my house. I already do 50-60 miles a day so I do not see this sable taking the high miles for too long. The atlanta heat is not kind to a car. I will have to buy a new car to keep up with me. If I miss a wedding do to car peoblems, that will hurt me bad. One late arrival at a wedding, can cost me hundreds of dollars. The business will pay for the new car in no time. Heck If it gets really good, I can make double payments on the car. We shall see. But anyway, I will cotinue to keep you guys posted.

mazdaprofour · July 2002

Hello folks, the day is over with. Here is how it all went.

I arrived at the court 1 hour ahead of time. I located the hearing room and quietly made my way to the back. I sat down and looked around. This was a fairly small room with a table in the middle and a trustee at the table. All the clients and lawyers where sitting down. The trustee began by pressing the record button and stating the date and time of the hearings. He began by going down a list to make sure that the lawyers and clients where present and ready. Some clients waited on the late lawyers and some lawyers waited on the late clients. These cases where moved up to a leter time by the trustee. He called up the first client and lawyer. They both sat down at the table. The lawyer sworn in the client and it began. The trustee asked for the ID of the client. The client was asked to state name and address. The following questions began by the truste:

1-how did you calculate the value of your home?
2-do you have any pending lawsuits?
3-have you been seriously injured in the last 2 years during a motor vehicle accident?
4-does anyone owe you money?
5-why did you claim bankruptcy?
6-has the lawyer went over the bankruptcy law sheet with you?
7- is there any lawyers present in the court room that this client has a debt to (in 90% of the cases, no opposing lawyers appeared).

This all took about 5 minutes and the trustee would say thank you you are done.

After watching 10 of these, I knew it was easy.

I went through the routine and a lawyer did appear for the company that I had my previous repo car with. She just asked me if I had returned my car and if it was in good condition. She also told the trustee the car balance was 20K and value was 12k. He signed off on everything and that was it. All went great. I went to honda and found out that I will need 3k down to get a loan right now. So that is not too bad. I am waiting to save up. Any questions? hopes this helps anyone that has any fear about bankruptcy....it is not as scary as some may make you think it is....no whips and no jail

alfox · July 2002

and no time elapsed yet. If, after a year or two, you end up feeling little pain from all of this, that means that:

a) You were smart, contrite and did not try to stretch yourself too far into debt again; or

b) The system is too easy to work, and fast credit is too easy to get, which will victimize us all in the long run; or

c) You are insensitive to the effects you have on others, and don't really care; or

d) A combination of b and c, which scares me a bit.

I offer my honest wishes for a secure and sucessful future, and my hopes that your life tracks down the "a" corridor. Good luck.

saturnfan · July 2002

Fezo,

That was a great thing to do, and you deserve a lot of praise.

Mazda,

Just like my hearing - 5 minutes. Surprising the creditor's lawyer was so unprepared. Why on Earth did she even bother to come if she had to rely on you for the info.

Can't tell why you got the purchase offer. Normally, only reaffirmations of existing debts need to be done before discharge. Perhaps your atty can tell you if the offer was a scam. If so, the bk judge's staff might like to see it.

Hope your new career goes well. Maybe you'll wind up in a Benz down the road. Just got a new 2003 Corolla CE for $13,996 full MSRP, and it's quite a lot for the money. Five speed gets 35 - 40 mpg. Might want to check it out if the Honda dealers are hitting you on the high side.

mazdaprofour · July 2002

I am going to wait this out. It seems that the discharge letter is a must so I will wait on that. My paperwork says that any problems by a creditor must be put in by 9/28. So I think that the letter should come by mid or end october. This will give me some time to save some money for a good downpayment. I am thinking 3-4 thousand dollars. I am not sure if I should put any money into the mercury in the meantime. I think it needs some struts and a tune up. The struts are 300.00.

afk_x · July 2002

Please explain what you mean Alfox when you say

"b) The system is too easy to work, and fast credit is too easy to get, which will victimize us all in the long run; or

c) You are insensitive to the effects you have on others, and don't really care; or"

Who is victimized and what effects does BK have on others?

alfox · July 2002

We've been through this, and been cautioned for getting off topic. I think my position has been made clear. If you disagree with it, OK. Time to move on.

saturnfan · July 2002

Normally, no new credit until you get your Order of discharge letter.

Would be most unusual for a creditor to object unless there's a smell of fraud in the air, so this is normally just a formality.

With that downstroke, you should be good to go for a new car. Struts and tune up are probably optional unless the handling's so bad that it won't wait or will fail state safety inspection.

afk_x · July 2002

Can you back up your statement with facts? Or is your "position" just your opinion? I know what your opinion is but can you answer my question or not?

I'll restate : Who is victimized and what effects does BK have on others?

Maybe you should look for the topic "I don't know what I'm talking about" and post there?

KCRam · July 2002

That's enough - those questions were asked and answered long ago.

kcram
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fezo · July 2002

Mazda -

Hope it goes as well as it sounds. Keep with the program, save that $3,000+ and learn from the mistakes.

mazdaprofour · July 2002

Hello guys, I am still awaiting my discharge letter. In the meantime, I am working crazy overtime to save up money. I am doing 35-40 hours of OT per week. I should be able to save a good chunk of money by October. Once I have the money saved, I would look into maybe buying a new accord. I checked with my insurance, and found that a 2002 honda accord DX is actually cheaper in insurance than a 2002 honda civic DX. Go figure. Anyway I would think that with the release of the new accord in sept, the old accord will go down in price and I may get a better deal. I also think that the dealership will be more willing to work with me on financing. Do you guys know how long honda normally will carry a older model at the dealership when they get a newer model. I am not sure if they will have any 2002 accords to sell in November if the 2003 is released in sept, any thoughts?

alfox · July 2002

Still gotta have that new car!

mney6 · July 2002

You just confirmed alot of people's opinion of you.
It's amazing how all of a sudden you can work extra hours so you can buy a new car,but couldn't do it before.

jocko9 · July 2002

I simply shake my head in amazement.

fezo · July 2002

But at least he's looking at something that won't lose value and will hold up for probably 10 years and in case of emergency is likely to be able to dump without going upside down on the loan...

I still say hold on to that Sable and keep saving.

mazdaprofour · July 2002

Like I said I am not going to work for the credit card companies. Any overtime that I do is going towards a house, car or my pocket. Lets keep the personal comments out

afk_x · July 2002

Getting a car loan is a very good idea. You can't reestablish credit without taking on new debt.

I don't think buying a new car is the way to go - you're going to pay an extremely high rate of interest. Better to finance a small amount, unless of course you plan on paying the entire loan off in 12-24 months in which case the rate won't make a huge difference.

mazdaprofour · July 2002

My next car, I am going to keep till it dies. I do not see the point in investing in a used car that may have problems down the road. I would rather make payments on a new car and baby it so it lasts. Even with a used car, I will be in payments. I would rather pay 100.00 bucks more a month and know that I am driving a very reliable car. I will not loose money on a accord and it should last 200,000+ miles if it is taken care of. Also the accords are going at a good price since the new one is just about to come out.

jocko9 · July 2002

And God bless the USA.

spright · July 2002

Speaking of staying away from personal comments, I fail to see how mazda's repetitive justifications for getting a new car have anything to do with approval after bankruptcy.

mazdaprofour · July 2002

spright....well since I do need to get a car and I am getting it after a BK, it seems to me that it makes sense. This is a long term post, so I plan to keep updating with new information. Thanks for the concern.

perna · July 2002

Think of the BK as starting over, e.g. you're fresh out of college and broke. How many very recent college grads go out and buy brand-new vehicles? A financially responsible one would buy a reliable, used car for $3-4k or so and start putting money in the bank.

Maybe it would help to not picture the monthly payments you can afford, but think of it as taking on ~$15k in debt. Isn't that a good percentage of what you just wrote off?

Kirstie_H · July 2002

I have, in my driving lifetime, purchased two exceptionally reliable cars for $2500 & $2000 each. Were they attractive? Erm... nope. Completely reliable and functional? Yup. And the best part was, after keeping them each for two years, I sold them for a few hundred less than the amount I paid. I'm saying this simply because, with a reliable, used car, you have MUCH less to lose if you want or need to sell, and there is just no risk at all of being upside-down. This might be a good option for those who are in a position of needing to be risk-averse.

kirstie_h
Roving Host & Future Vehicles Host

lokki · August 2002

Why take on the peril of a loan the size of a new Honda immediately after you're able to do so? Since the factors that led to your BK were apparently beyond your control, it seems reasonable to think that you might be in danger of having problems again if you take on too much debt.

I would guess, that if you have a problem with your first loan after a BK the next one is going to be hard to get.

Objectively, I think you'd be better off to buy a used car for $2,500 - take a small loan for that first after-BK-high-interest loan and bank the rest of the money you're making working OT. Sure the savings interest rates aren't great right now, but you'll have money for repairs if you need it, and you'll have a month or two's worth of payments available if you need them. By the time your used car dies, you'll have more money to make down payment with, AND you'll qualify for a lower rate.

fezo · August 2002

Excellent advice. Lots of great, cheap used cars out there. They ain't sexy but many can be quite dependable. An old Civic, Carolla - or better yet Sentra (because their overall resale is lower but it is quite competitive) would do the trick. You need bigger? Get a Stanza or early Altima. All beat the old Sable in dependability and if you get the right one you could be saving for several years!

isellhondas · August 2002

The people who ask for advise usually will find a way to justify doing the opposite thing.

Then they wonder why they get in trouble a second time....

I see this all of the time.

fezo · August 2002

but whatever happened to mazda? Our topic founder is not about. I'd be curious how it is going and what's going on.

alfox · August 2002

they repo'd his 'puter.

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