I just bought a $21,000 car 2 weeks before filing

[Ezrin]

What happened was I finally got a good job and needed a reliable car for it. I was going to make do with my 12 year old car, but my dad transferred me money to get a new car, and said I can pay him back $400/mo. He didn't want me driving the old one (he also doesn't know about my current financial situation). Now, I had no idea at the time I was going to file for Ch. 13; with my new job I thought I could finally start paying everybody back. I had a judgement against me, and found out that they were going to go to my employer for wage garnishments. I looked that up on the internet and mistakingly thought that the law here would allow them to take up to 75% of my income (of course now I know that's not true). Anyway, because I was worried about the 75% garnishment which would make it impossible for me to get by, I had no choice but to go to a lawyer to see about filing ch. 13.

So I was wondering, do you think anybody will give me a hard time about this (like the judge or trustee)? My lawyer said they won't even ask about it, but I find that hard to believe. It just stands out so much in that paper I had to fill out about the possesions I have. If I was a trustee I would certainly be suspicious of somebody buying a brand new car, with cash, just a couple weeks before filing.

[JeepMom]

You should be able to prove through bank statements that your dad gave you the money. You may need to draw up a contract with your dad about repaying the car.

[keepmine]

Nothing in the bk code precludes anyone from receiving a gift- and that's what the money is unless you have some contractual obligation with your father that spells out repayment terms. I'm curious if your lawyer is claiming the $400 month repayment as an expense? That could be a problem unless you do have a contract. You have disclosed the asset on the forms. Since the equity is likely far more than your state exempts in a Chapter 7 filing, it's likely that the percentage payback to unsecured creditors will be pretty high.

[SinkingFast]

I would think even if you had a "contract" for the car loan from Dad the Court would have problems with that.

Dad is an Insider. Family and Friends are Insiders.

Any payments to an Insider could be considered Preferential.

[alh]

Just curious as I am not sure. Do preferential payments apply to secured debts or just unsecured. There may be something in that that might apply. Just thinking out loud.

[keepmine]

Preference payments can apply to both secured and unsecured debt.
In the OP's situation, if the contract called for repayment terms along the lines of a contract with a finance company and if Dad did what a good lender will do and file the proper lein against the vechicle then, I think you'd have no preference issue.
I just think a handshake agreement with an insider is not gonna fly when the expense claim is $400/month.

[Ezrin]

Thanks for the replies. The lawyer did not include payments I will make to my father in the papers, but I was still able to get by after he figured everything out (hopefully so). I was actually going to point out to him that we forgot to put that payment on my list of obligations, but when told me I was going to be paying $279/mo for 4 years I thought that was manageable and didn't bother. My meeting is on the 13th of this month and I'm still very nervous even though I read on this forum most of the times it's no problems.