Car Loan Questions

[murphy728]

Hi Everyone,
I have my first appt. with an attorney this Friday to discuss possible options for my family. We have 2 cars, we are upside down on both but one we are really upside down on ($12,000). We need to have 2 cars. My question is should I go out and buy a car now before we file and before our credit is bad? Then try to keep that car and the one other car we aren't totally upside down on? And how much can I ask my lawyer? Thanks for any help.

[StartingOver08]

Tell your attorney everything. Be totally upfront.

As to buying the cars - do you think you are going to be a CH 7 or a CH 13 as the answer is different.

[murphy728]

I have no idea. We want to keep our house, we only have about $5,000 in equity, so I'm not sure how that works. His secretary said if you want to keep your house your probably going to file CH. 13 but I guess I'll find out Friday. Good to know that you can tell your lawyer anything. Thanks

[StartingOver08]

If you are behind in your payments on your house, you can catch them up in a CH 13.

If you are current on your payments for your home, then you can still file a CH 7 and keep the house. You can not be behind in your house payments and file a CH 7 or the lender will lift the stay to foreclose.

It is usually better for you to file a CH7 (easier, quicker) than a CH 13, UNLESS you are specifically looking to protect your home or some other asset. Of course, you have to pass the means test to file a 7.

[murphy728]

We are currently not behind on any of our bills. But my husband just got laid off for the winter 3 weeks ago. Our CC interest rate just went from 7.5% to 14.99% because that's what they do to people who are actually trying to pay them off.(never late EVER). Now that the minimum payment went to $250 on all 3 that just isn't possible. I figured I should get started now rather than when I'm behind on things. The house is the most important thing to me anyhow, I don't want to lose that. They can have anything else I have which isn't very much if anything at all. The car we are totally upside down on I hope they will take but it just sounds a bit fishy to me that if I go buy a car next week and then file for BK 2 or 3 weeks later they will know that I bought another car just to get out of being upside down on the first one. But I guess if it works then I'd better get a car before my credit takes a dive. Do you know anything about just one of us filing? All the loans are in his name primarily, I think I've cosigned on the cars but not the CC's. What would happen to my credit if only he files? Thanks for your help.

[StartingOver08]

He can file alone - without you. If you have joint accounts then the debt will still be owed by you (unless you are in a community property state).

Your household income for the past 6 months is used to determine eligibility for the BK (which chapter). If you are upside down in a vehicle now, you can surrender it in the BK.

His filing should not affect your credit UNLESS it is a joint account - then the TL (tradeline) will read IIB (included in Bankruptcy).

In order to figure out if you qualify for a CH 7 or CH 13, you need to complete the means test first. What state do you reside in now? Have you been there for at least 2 yrs?