Q: Chapter 7 bankruptcy was discharged. Reaffirmation agreement was never signed, due to misplacement of paperwork?
The lien holder allowed me to keep my vehicle as long as I made payments on time and thanked me for doing so. I have done this for 12 months. The question is I am underwater on the vehicle by $4K, and it is time to sell it or trade it in for a new car. My credit scores are back in the 700 range and employment steady. I know the lein holder doesn't want to get stuck w/ the car. I, in turn would like the positive credit score hike for using the car as a trade in and paying it off. What is the best way to approach this situation? What are the chances the lien holder will dismiss the $4K, take trade in value, to avoid being stuck with another used car? Should I propose this option to them, as it is a win win? Should I choose the redemption option and force the process? If I take this approach will buying the car back still be reflected positively on my credit report, or would I most likely lose the huge benefit? Thank you for your time and consideration. Michael
A: This is really not a bankruptcy question so I am unable to tell you how any of the options will affect your credit. However, you need to determine what is financially best for you. From my experience with other clients, if you use the car as a trade in, and money is still owed on the original loan, the new lender will likely include the balance in the loan for the new car. Redeeming the car is paying the current fair market value for the vehicle - so depending upon that value and whether you have the funds to do that (which usually requires a lump sum purchase) - may not be viable for you or worthwhile. The best for your credit may be to continue the payments until the loan is paid in full.
A: Your best best is probably to redeem the car.
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