722 financing?

[tjw]

Has anyone out here actually done a 722 redemption or 722 financing? We were looking into the 722 financing, but from what I've seen in past questions/responses, this sounds like a very bad idea and looks like we might be better off reaffirming our current loan, or looking for another vehicle right after our BK discharge?

Current car is ok, however, is getting very high in mileage despite being a newer vehicle, and is too small for our family- as we found out when baby #2 came along so we'd like to give it up while we have the opportunity. The 722 financing sounds good from looking at the website, but from people's responses to it on this site, it doesn't sound too good. Could someone explain how it actually works please?

[MarvBear]

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[NeverQuietHere]

uh oh..... I wish I would have read more on this site about 722. we just did it and have been happy so far......i am going to have to search now and read about other people and their experience with it.

 

we got about $5K taken off of our van.............

[MarvBear]

overall from my general impression, I don't believe the results are favorable, although I have no personal experience.

 

Hopefully others will chime in.

[hurricanesfans27]

I havent heard of this either. I googled it and got a website from US Bank. Looks promising but whats the fine print?

[tjw]

We had looked into doing a 722 redemption on our current car, but our attorney advised us against it (but then said it's totally up to us in the end) because our car, although upside down in the loan, is not a "higher end"- he was saying that the 722 redemption is great if you have a very expensive vehicle that is still worth something and owe quite a bit on it yet. But in our case, we owe about $7800 on our car that is worth about $5000 because of high mileage. It is a newer vehicle and is nice, but we have also outgrown it (2 kids in carseats are just NOT working in the backseat!). We have about 3 1/2 years left on the loan and by that time, it will be worth nothing practically!

 

Anyway.....from what I have seen about the 722 financing is that they make it sound great...that you can get a newer, low mileage car, good interest rate, good payments, etc. and then last minute they will change your rate (most of the ones I saw said they went up to 24% when the loan was finalized) and that they push certain wholesale dealers on you that may or may not let you see the vehicle before you purchase it. As far as the interest rate goes, they were all saying that they were "prequalified" for a great rate (or better than what they'd get at a dealership or conventional bank) and when they went to sign papers on the loan, theyy were told that the "best" they could do was 24%. Again, I have NO experience with this, it's just what I was reading so I was a little nervous to pursue it any further until I heard from some others that may have done this!

 

 

cfj503- when they took the $5000 off your van, did your interest rate change at all, did the loan term change at all? Just curious because IF we could do a redemption on our car and get lower monthly payments, we could make double-triple payments every month, get it paid down, then find another car.

[odudave]

tjw, I am in the exact same boat as you right now. We are set to discharge in December and I have thought a lot about using 722 Redemption. We have a similar problem in that we have a lower-end car. We owe about $12K and it's worth about $8K. From what I understand, if 722 negotiates a redemption at a lower payoff, yo uare basically refinancing through them at their rate. In our case, I ran the worst-case numbers with a 24% rate at $8K. They payment came out HIGHER than if we just reaffirmed under the existing rate/terms through Ford.

 

I am now leaning toward not signing the reaffirmation with Ford, surrender the car and take my chances on getting something after discharge. I saw a post in the BK forum today where someone got 1.9% 3 months after discharge! I'm sure that's not the norm, but I bet we can do better than a 24% jacked rate from 722 Redemption!

[tjw]

Yes, I saw that too! I have been doing a lot of reading on that board and it's so helpful- I have learned so much!

 

I know what you mean...we were leaning toward that too. I asked a ? on the BK board about how long you actually have from the 341 to reaffirm and was told that you generally have 45 days, but that you have 60 days after that to change your mind. Meaning IF you did reaffirm, you could take some time to look for a better deal, in the meantime keep your current vehicle. If you found something within those 60 days, great. If not, you still have your car.

 

I looked into that 722 redemption stuff too...our lawyer didn't think it was a good deal given our circumstances. Right now, we have a 2003 Grand Prix which is nice, but has very high mileage (over 110,000 already) and there are bound to be problems cropping up sooner or later. Not to mention that we have 2 kids in carseats and they don't fit in the backseat hardly! We have to pull the front seats way up to make room and that does not make for comfortable driving! Plus, it's probably only worth about $6000 right now and we owe almost $8000.

 

Good luck with your car....hopefully we'll both find something that works for us! I have heard that Ford is very very good about dealing with post-BK (even pretty close to the discharge date)- my husband used to be against anything Ford, but after having a Ford truck, he changed his mind, so maybe he'd consider it again!

[NeverQuietHere]

cfj503- when they took the $5000 off your van, did your interest rate change at all, did the loan term change at all? Just curious because IF we could do a redemption on our car and get lower monthly payments, we could make double-triple payments every month, get it paid down, then find another car...

 

we bought a 2003 windstar in april. after our repo (yes those monsters work on Easter! that's when they took our stratus) anyway, the interest rate with Credit Acceptance for the van was 24%, 36 month loan. our payments we roughly 435. (with 1000K down) our loan was for almost 12K (we bought a warranty too)

 

With 722 we got the loan shortened to 30 months, 24% interest rate, and I think about $7K or $7500 (something in there about paying our lawyer $600 to do this redemption). Our payments are now going to be 360 a month. So on our end, I think it worked out fine. Yes, 24% is high, but.... we have every intention of refinancing after a few months with someone else, or else trading it in. Now, we haven't gotten the payment schedule from US Bank yet but..... we were told our first payment would be due in about 4-6 weeks.

[NeverQuietHere]

oh ya, you can talk to them and see what rate or what your payments will be. the lady originally told me that it could be as much as 390 a month, but when it was all said and done, it was only 360. they will tell you what to expect before you agree to anything. give them a call and see if it is worth it for you.

[hoapres]

(In general and not meant to be specific) I am against 722 redemption programs as the interest costs are likely to be high (24% with the USBank 722 redemption program is typical) and one is likely to have no equity in the vehicle. If one has no equity in the vehicle then the best financial course of action is likely to be returning the vehicle and securing post bankruptcy discharge financing.

[LauraC]

I did do the 722 with my bk7.

 

It was high as others stated. In fact 24% with Us bank.

 

I have a 2003 honda element.

 

Here's how it went:

 

Lawyer told me after filing that it wasn't necessary to make payments as I could redeem for the KBB value of the car. Sounded like a great plan. Even with 24% the payments were lower because we were upside down.

 

My divorce was at the same time as my BK7 (we filed joint) before doing the divorce, so I was going at it alone and didn't want to lose the car.

 

Well, it came time to do the actual 722 financing and the company I had been with refused the amount. Without my approval it was negotiated so all that happened was my rate got higher and my payment stayed the same (since the price went up)

 

But I was behind because I stopped paying and so I took it.

 

I only made 4 payments with US BANK Redemption funding before i refinanced at 10/24% with HSBC.

 

I know most folks aren't fans but trust me that's the best rate I've had in 7 years.... It worked out for me but you have to be like a fly on honey getting it refinanced as soon as you can.

 

So now I have my payment to 100 less then it was before bk7 with no adding of term. In fact i'm a few months ahead. ( i made sure when refinancing i didn't add any payments either time)

 

I hope that helps. 722 can be to your benefit if you are upside but want to keep the car and you have the tenacity to get refinanced.

 

Good Luck