Question concerning Chapter 13

[marko959]

I'm over $100,000 in debt because I trusted a sociopath, and I guess I'm pretty naive.

I live in the state of Texas. I'm going to file bankruptcy, but I make too much for Chapter 7, so I have to file Chapter 13. I have given my debts information to my lawyer. He figured the monthly payment I would make for Chapter 13 based on some type of formula that I guess figures in my income and expenses...and maybe debt? Anyway, he did not include my car in the debt. If I included my car in the Chapter 13, in other words give it up, my monthly bankruptcy payment would be much higher. So I would have to buy a different car....for cash....which I don't have.

But some friends mentioned to me they thought I could include my car in the bankruptcy, keep it, and it would be part of the bankruptcy payment. That would be great because I had to get a high interest loan to buy the car, so it would be nice to not have to pay that interest any longer.

So I guess I am asking if this is possible. Can I include my car in the bankruptcy, keep it, and have it included in my monthly bankruptcy payment?

Thank you in advance for any guidance you can provide.

[faithwolf]

Yes you can include them in your chapter and the interest rate will be reduced.

[despritfreya]

If your car is under a purchase contract it can and will be paid through the Plan. If it is under a lease you will have to make direct payments to the lessor - any pre petition missed payments under the lease can be cured through the Plan.

Des.

[marko959]

Thank you very much for the replies.

The car is a loan and not a lease. The interest rate is at 23%, I have not missed a payment since I have had the car.

The bankruptcy payment for me was calculated without the car included at $480/month. My car payment is $485/month. I don't know how including the car will affect the monthly payment for the bankruptcy. Anyone know how they calculate this?

[justbroke]

The first thing a Chapter 13 could do to that car payment, is get the interest rate down to about 5.5% or so. The other thing is that the payment would be re-amortized over the life of the plan. Finally, depending on several factors (was the car purchased more than 910 days ago, or was it refinanced at some point), you may be able to pay only the "value" of the car in the bankruptcy by shedding any negative equity.

You'll need to work with your attorney on how to deal with the car. If you didn't file with an attorney, you'll have to figure out things like Till Rate, the 910-day rule, and whether you can cram down the vehicle.

[despritfreya]

The first thing a Chapter 13 could do to that car payment, is get the interest rate down to about 5.5% or so. The other thing is that the payment would be re-amortized over the life of the plan. Finally, depending on several factors (was the car purchased more than 910 days ago, or was it refinanced at some point), you may be able to pay only the "value" of the car in the bankruptcy by shedding any negative equity. You'll need to work with your attorney on how to deal with the car.

This above.

I don't understand why you are paying the vehicle outside the Plan, especially with a 23% interest rate. Maybe you purchased it shortly before filing? Talk to your attorney.

Des.

[marko959]

Des,

I am going to file, but haven't filed yet. I was going to let them take the vehicle in bankruptcy, but someone told me to include it and the interest would be lower in the plan. My lawyer never said anything about that. That's why I want to check here. Lawyer said I should turn it in. But I have no cash to buy another.

[despritfreya]

Des,I am going to file, but haven't filed yet. I was going to let them take the vehicle in bankruptcy, but someone told me to include it and the interest would be lower in the plan. My lawyer never said anything about that. That's why I want to check here. Lawyer said I should turn it in. But I have no cash to buy another.

Lawyer may be concerned that the keeping the vehicle is too costly. If so, then, the question becomes. . . If you add payment of the vehicle through the Plan how much will your Plan payment increase? Can you afford the higher Plan payment? You will not have a line item for a vehicle payment in Schedule J since the vehicle payment is part of the Plan payment.

Sit down with the attny and go over the numbers. As mentioned by others, and assuming you did not purchase the vehicle on the eve of filing bk, you will be able to substantially reduce that 23% interest rate. It is worth looking into this before making a final decision.

Des.

[marko959]

I purchased the vehicle more than 3 years ago. I will talk to him about what would be best.