Cars in a Chapter 13

[seanf12]

I have a leased van (won't be up for another 3 years), and I just purchased a used a few days ago (for around $12k, my old car finally died)). I plan on filing in a few months for chapter 7, but if I were to get converted to a 13, would they force me to pay the cars through the plan, or do you always have the option to reaffirm?

Thanks

[lrprn]

Whether car payments are made by the trustee or the filer in Ch 13 depends on several things:

1. If the filer is in arrears and wishes to keep the car, then the trustee must make at least the arrears payments (hopefully you won't be in arrears when you file).

2. If it's advantageous to stretch out car payments over the 3-5 years of the plan to make a smaller consistent monthly payment throughout the plan, then the trustee must make the car payments. With a new car purchase like yours, this will not be much of an advantage in your case.

3. You don't want to pay the trustee his/her admin % to make car payments you can make yourself. The one issue here is that since your filing includes the car you just purchased, the lender will very likely not only remove any online access you have to make payments, the lender also will not send you a bill every month (violates the automatic stay). You have to remember every single month to make your car payment on time without any prompts.

4. We've had a few members state that their bk court custom forces them to set up their plan so their trustee makes their car payments. If you are stuck in one of those districts, then that's how it's going to be. (Hope that's not the case for you.)

Talk to your lawyer about what's going to work best in your particular debt situation.

[seanf12]

Thanks for the feedback

What's the disadvantage to the trustee making the payments for me?

[HHM]

Thanks for the feedback

What's the disadvantage to the trustee making the payments for me?

The trustee fee (of anywhere from 4-10%). You are basically giving the trustee free money and being charged additional interests (the trustee fee) to have the trustee make a payment that you can make.

[seanf12]

Ahhh, that makes sense. thanks!

[seanf12]

why would the bk court force you to make payments through the plan?

[MajorMike]

Ours did. The trustee said we HAD to include the car in the plan or he wouldn't approve it...which is fine with us.

[seanf12]

Any ideas why he forced you to include it in the plan?

[diviaruba]

Any ideas why he forced you to include it in the plan?

$$$

If Mike's car payment is say, $400, then his other priorities and unsecureds would be around $425. At the average 7% trustee commission, that's around $30 per month to the trustee's office. Not a lot of incentive to do all that work and pay a staff.

[MajorMike]

NO, that's not the reason. He said he wanted to make sure my secured item ( the only one ) was paid every month. This works out much better for me as well because the interest rate is much lower and I dont' have to worry about my car payment now.

[qwertysue]

NO, that's not the reason. He said he wanted to make sure my secured item ( the only one ) was paid every month. This works out much better for me as well because the interest rate is much lower and I dont' have to worry about my car payment now.

I have a car that I'm negative equity on. I'm paying over $700 a month because I had to roll in the previous car's negative equity.

from: http://www.bkforum.com/showpost.php?...9&postcount=20

Is this the same car mentioned in the first quote? If so, kudos for getting a great attorney who turned included a car payment over $700 a month into your $825 a month bk payment plan!

[Cali]

Whether car payments are made by the trustee or the filer in Ch 13 depends on several things:

1. If the filer is in arrears and wishes to keep the car, then the trustee must make at least the arrears payments (hopefully you won't be in arrears when you file).

2. If it's advantageous to stretch out car payments over the 3-5 years of the plan to make a smaller consistent monthly payment throughout the plan, then the trustee must make the car payments. With a new car purchase like yours, this will not be much of an advantage in your case.

3. You don't want to pay the trustee his/her admin % to make car payments you can make yourself. The one issue here is that since your filing includes the car you just purchased, the lender will very likely not only remove any online access you have to make payments, the lender also will not send you a bill every month (violates the automatic stay). You have to remember every single month to make your car payment on time without any prompts.

4. We've had a few members state that their bk court custom forces them to set up their plan so their trustee makes their car payments. If you are stuck in one of those districts, then that's how it's going to be. (Hope that's not the case for you.)

Talk to your lawyer about what's going to work best in your particular debt situation.

What if you have your payments set up via bill pay?

[MajorMike]

Our car was $646.00 and our plan is $825. It is pretty cool huh?
But, now we have AMEX on our skirtails but my attorney filed a great answer to the complaint and hopefully Amex will back down a bit and throw out an offer. I'm sure they don't want to send their high priced attorneys to our town ( they are about 2 hours away ) to fight this....$5,000 case.