I filed bankruptcy and did not reaffirm my car however I am still making timely payments on my car and have never been late. Since I had a co-signer, I know I can't surrender the vehicle to the finance company because they will go after my co-signer. Can I trade-in the vehicle to get a new lender for credit purposes alone or would I need my co-signer to be a part of the trade-in?
That would depend on whether you filed under Chapt 7 or Chapt 13. In a 13, after confirmation of the Plan, you must get Court consent to take on new debt. If it was a Chapt 7, and you have already received your discharge; there is no restriction. If it was a Chapt 7 and you have not been to the creditor's meeting yet, you can do nothing, since the Trustee has an interest in the vehicle. Even if you are "upside down", with the car worth less than what is owed, until the Trustee abandons his/her interest in the vehicle, it is not yours to trade in.
Whether the co-signer must participate in the trade in depends on the co-signer's position on the title to the car. The co-signer may not be on the title at all, just a signer on the car loan. Or, the title may show you "or" co-signer, in which event, you can sign title over without the other. It is only if the title shows you "and" co-signer that forces you to have the co-signer also sign the title transfer.
I hope this was helpful.
You should speak with the attorney who handled your bankruptcy rather than rely on advice based on a brief statement of facts. Familiarity with your file assures you will get accurate advice.
Based on the way you state your question, it sounds like you filed Chapter 7 and received a discharge. If you trade in the car now, any balance would get paid in full as part of the transaction. So, yes, from the facts as understood, it sounds like you can proceed.
The issue may be whether you qualify. If there is any equity in the car, that may be helpful. If you are still upside down, it will be more difficult. More importantly, it may be a poor choice. Stretch it out as long as you can getting caught up through the current transaction, rather than making the choices that led you into bankruptcy in the first place. If you are upside down and build that deficit into the new loan, you will very promptly be substantially upside down in the new transaction.
I highly recommend you consider a course such as Financial Peace University: http://www.daveramsey.com/fpu/locate-class. You should be able to locate a session in your area and it is well worth the registration fee.
If your case was filed under Chapter 7 (and the discharge was granted under Chapter 7), then the lien remains, but your obligation was discharged. The lien will not be released unless the loan is paid in full. If the vehicle is surrendered, your co-debtor will pay the difference.
Talk to an attorney in your area before trying to trade the vehicle in and reincurring the debt that you discharged. That is what will happen if you take out a loan to pay off the discharged debt.
[This communication is intended as general information and not specific legal advice, and this communication does not create an attorney-client relationship.]
