My car is cosigned by someone that recently did a Chapter 7 bankruptcy. I am being asked whether not I should redeem or surrender the car. What is the impact to me if I choose to surrender the car?
I signed the finance agreement in 2017. It’s a 2016 Chevy Malibu. Payments are $470.
If I keep it, can I negotiate a present value agreement?
Of your two options, here's how they could play out:
1. If you redeem the vehicle, all that means is you'll keep making the payments and keep driving it/using it. It appears from your question that you are not the debtor in bankruptcy, and as such, your obligation to continue to pay the loan is not impacted by the other person's bankruptcy.
2. If you surrender the car, again, your obligation to pay the note is not extinguished by the bankruptcy, and the lender could pursue collection activity against you.
As far as negotiating a better deal on the car, I'm not sure how successful you'll be there. The lender doesn't really have much of an incentive to work with you, as you are still on the hook for the balance, but it doesn't hurt to try, I guess!
Hope this helps!
Since you are not the bankruptcy debtor, you do not have the right to redeem and will be on the hook for the total debt no matter which choice you make. Frankly, I would sell the vehicle and payoff the debt ASAP.
The foregoing does not constitute legal advice nor create an attorney-client relationship. We are a debt relief agency, helping people for over 35 years to resolve their financial difficulties through bankruptcy.
The fact that your co-signor filed a Bankruptcy provides absolutely no protection to you. The debt on the car will essentially simply fall entirely back on you. The Debtor in Bankruptcy is the one that will benefit from no longer owing on the debt. As soon as the Debtor in Bankruptcy emerges from the Bankruptcy process, the car lender is going to come after you for the remaining debt on the vehicle. If you surrender the car, they will sell it at auction (likely for much less than is owed on it), and you will legally liable for the remaining debt that exists. Redemption is not likely to be an option for you because the financing company already has you bound by the contractual terms to pay the debt. Unless you are intending on filing a bankruptcy yourself, the lender has no incentive whatsoever to negotiate with you. Now is the time to consult with a qualified Bankruptcy Attorney to determine whether or not filing a bankruptcy is an alternative that will provide you with the ammunition to convince the lender to negotiate a resolution with you. Best of Luck to you.
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You're not the debtor in the bankruptcy case so you don't have the same options. If the vehicle is surrendered to the lien holder you will still be responsible for any deficiency balance. In terms of negotiating a settlement....they might do that...but there is nothing that compels them legally to do so.
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