The engine in my 2001 Hyundai Santa Fe "died" over the weekend at 83000 miles. After evaluation, it was determined that the timing belt broke and led to other severe damages. Estimates are to replace the engine w/ a used junkyard engine for over $3000. Hyundai's warranty will not cover because we are the 2nd owner and we are now stuck with the car loan.

We currently have more debt that income on a monthly basis AND our nearly $100,000 in student loans are all on forbearance. In addition, we have over $20000 in credit card debt through a debt management program.

We cannot trade the vehicle in or afford to get it repaired because of the financial situation and we cannot open new credit to pay for the repairs. We have been approved for a new car loan BUT we can't afford to add loan, only replace the current loan but that is not possible now. IMO we have two options: default on the vehicle and let the bank repossess OR file bankruptcy.

Could we still purchase a new vehicle with the new loan if we default or file bankruptcy? We own a home but only for 10 months and do not have equity. We have about $100 each in checking and savings. What is our best option?

Please let me know if you need additional information.
Thanks!

Hello Andypinky99

If your debt is more than your income, then maybe you should talk to a bankruptcy attorney You do not need to take on any more debt! Just remember that student loans
Are generally not forgiven in bankruptcy Talk to an attorney asap Chapter 13 maybe your answer
Also if you default on the car loan the car will be sold and whatever is left on the loan you will be responsible for.

Letting the car be repoed would be a BIG mistake. That will not relieve of the responsibility for the loan. They will just sell the car at auction (and with a blown engine it won't get much) and you will still be rersponsible for the balance.

If you got approved for a new car, you should be able to get approved to get the car fixed.

Quote:

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Originally Posted by slowandeasy

Hello Andypinky99

If your debt is more than your income, then maybe you should talk to a bankruptcy attorney You do not need to take on any more debt! Just remember that student loans
are generally not forgiven in bankruptcy Talk to an attorney asap Chapter 13 maybe your answer
also if you default on the car loan the car will be sold and whatever is left on the loan you will be responsible for.

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Since we have no equity in our home, what would we risk by filing chapter 13 (aside from the 10 years bad credit)? Could they come into our home and take any possessions or take our home? Would they garnish our wages? We have to have a new vehicle by Monday because my wife goes back to work (she was off work on maternity leave for our first new baby). Would chapter 13 eliminate the credit card debt and the auto loan? Finally, if we purchase a new car would they take that also?

Thanks!

Quote:

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Originally Posted by ScottGem

letting the car be repoed would be a BIG mistake. That will not relieve of the responsibility for the loan. They will just sell the car at auction (and with a blown engine it won't get much) and you will still be rersponsible for the balance.

If you got approved for a new car, you should be able to get approved to get the car fixed.

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Scott,

OK so we definitely will not default on the car loan. We are not "allowed" to open a new line of credit according to our debt mgmt agreement in order to pay for the repairs. That would be counterproductive since we are under now already whereas we already pay $244 a month for the broken vehicle so we can certainly get lower monthly payments on a new car.

Thanks for your response!

Chapter 7 bankruptcy eliminates most debts, chapter 13 is a repayment plan. I am not sure how the new laws for bankruptcy work but I know you have to take a means test to see if you qualify for chapter 13 or 7. The new laws are strict and I doubt if you could purchase a new car prior to bankruptcy. If you stop paying on credit cards and such they will sue you and if they obtain a judgement yes your wages and or bank accounts can be
Attached.

Quote:

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Originally Posted by slowandeasy

Chapter 7 bankruptcy eliminates most debts, chapter 13 is a repayment plan. I am not sure how the new laws for bankruptcy work but I know you have to take a means test to see if you qualify for chapter 13 or 7. The new laws are strict and I doubt if you could purchase a new car prior to bankruptcy. If you stop paying on credit cards and such they will sue you and if they obtain a judgement yes your wages and or bank accounts can be
attached.

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I have looked into the means test before and according to my calculations we should pass and qualify for chapter 7. I am still paying on the debt management plan so they will not have a reason to sue now. If we are able and do file for Chapter 7, what assets can or will they take since we have no equity in our home and do not own a car outright.

I'm not sure about assets in a bankruptcy case, Maybe some of our fine debt and bankruptcy experts on this site can help you sort out the bankruptcy laws and be able to tell you about your house etc.

Quote:

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Originally Posted by slowandeasy

I'm not sure about assets in a bankruptcy case, Maybe some of our fine debt and bankruptcy experts on this site can help you sort out the bankruptcy laws and be able to tell you about your house etc.

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Does anybody have any suggestions about this? Will filing chapter 7 impact my house or cars? Also, what impact could bankruptcy have on future employment?

Thanks!