How much car?

[spearmint]

I am going to file Ch13 in the next month and I need to get a different vehicle first. How much car am I allowed?

[justbroke]

I am going to file Ch13 in the next month and I need to get a different vehicle first. How much car am I allowed?

The allowance is $489/month per car (up to two cars per households which require more than one, with some exceptions). This is the same in all Regions.

The Ownership allowance is generally for those who make a payment to a lender (and have a lien) for the car.

http://www.usdoj.gov/ust/eo/bapcpa/20090315/meanstesting.htm

(There is an additional Operating Allowance which varies according to where you live. However, this operating allowance isn't used for the expense of owning the car... e.g. the payment.)

[spearmint]

The allowance is $489/month per car (up to two cars per households which require more than one, with some exceptions). This is the same in all Regions.

The Ownership allowance is generally for those who make a payment to a lender (and have a lien) for the car.

http://www.usdoj.gov/ust/eo/bapcpa/20090315/meanstesting.htm

(There is an additional Operating Allowance which varies according to where you live. However, this operating allowance isn't used for the expense of owning the car... e.g. the payment.)

Does that include auto insurance?

[justbroke]

Does that include auto insurance?

That is suppsoed to include insurance, taxes and depreciation. However, there's an operating allowance too, which is generally about $200/car in most parts of the US (per month). That would be used for consumables and repairs, mostly. This seems to differ by District, so I have no good firm answer.

[spearmint]

Hmm . . if it includes insurance, I think mine may be higher. What happens if it is a bit higher? Is the $489 the same figure for every state?

[justbroke]

Hmm . . if it includes insurance, I think mine may be higher. What happens if it is a bit higher? Is the $489 the same figure for every state?

Yes, every State... everywhere.

Remember, you have the "Operating Expense" allowance as well.

[spearmint]

So let's say my car payment and insurance together come to $520 can I take the extra $30 out of the operating expense (which is, I think, gas and maintenance)? If so, would a trustee approve it?

[justbroke]

So let's say my car payment and insurance together come to $520 can I take the extra $30 out of the operating expense (which is, I think, gas and maintenance)? If so, would a trustee approve it?

Yes. You do it this way.

When you calculate the ownership expense, you just put what you pay for the car, less insurance. So if it's $320/month, then you put $320 in the box (and then it will give you the residual of $169/month).

Then you just claim the operating expense as well. Combined, the operating expense and ownership allowance should allow you to pay your loan / lease and buy gas, pay for repairs, and get insurance.

[spearmint]

Yes. You do it this way.

When you calculate the ownership expense, you just put what you pay for the car, less insurance. So if it's $320/month, then you put $320 in the box (and then it will give you the residual of $169/month).

Then you just claim the operating expense as well. Combined, the operating expense and ownership allowance should allow you to pay your loan / lease and buy gas, pay for repairs, and get insurance.

Thank you! That's a relief! lol

[HipHop]

What if I am way over the allowance? I bought a new car earlier this year and traded in my old Jeep which I was upside down on. My payments are around $850/month.

Here is some other info if it makes any difference:


I have about $120,000 in unsecured debt and no house. I also owe $8500 in taxes for the year 2008. I pay $750 for rent.

My take home pay each month is $4200.

From what I've been reading the allowance is around $450. What happens to the $400 in excess that I currently have once I file for Chapter 13?

[justbroke]

What if I am way over the allowance? I bought a new car earlier this year and traded in my old Jeep which I was upside down on. My payments are around $850/month.
.
.
.
From what I've been reading the allowance is around $450. What happens to the $400 in excess that I currently have once I file for Chapter 13?

Unless you pay the (additional) difference of approximately $400/month to the unsecured creditors (into the plan), you are going to get some grief from the Trustee what your plan is not filed in good faith.

For example. Your gross pay is probably $6K/month, putting you over the median (especially if single). That would put you in a 60-month plan. Say that your car is $850. If your housing allowance is $750, food and clothing $500, vehicle operating allowance $210... I'd say you'd have $1,883.90/month (DMI) to apply towards your unsecured creditors or about 92% ($110K).

The problem is, the DMI includes too much allowance for the car, so you'd have to add back the $361/month to your DMI, in order to keep that expensive car. This would make your DMI $2,194.90/month and put you into a 100% plan ($120K).

The problem is, that you have too much car allowance, so you need to dedicate $194/month MORE into your plan for a payment of That $194/month is going to come out of your food allowance or something else. If out of your food and clothing allowance, you'd have to eat on $300/month.

These numbers are all estimates (WAGs), and I use them only for illustrative purposes. I assumed that you were single as well.

Being single with that high income, is going to push you closer to a 100% plan anyhow.

[TooMuchCredit]

Unless you pay the (additional) difference of approximately $400/month to the unsecured creditors (into the plan), you are going to get some grief from the Trustee what your plan is not filed in good faith.

For example. Your gross pay is probably $6K/month, putting you over the median (especially if single). That would put you in a 60-month plan. Say that your car is $850. If your housing allowance is $750, food and clothing $500, vehicle operating allowance $210... I'd say you'd have $1,883.90/month (DMI) to apply towards your unsecured creditors or about 92% ($110K).

The problem is, the DMI includes too much allowance for the car, so you'd have to add back the $361/month to your DMI, in order to keep that expensive car. This would make your DMI $2,194.90/month and put you into a 100% plan ($120K).

The problem is, that you have too much car allowance, so you need to dedicate $194/month MORE into your plan for a payment of That $194/month is going to come out of your food allowance or something else. If out of your food and clothing allowance, you'd have to eat on $300/month.

These numbers are all estimates (WAGs), and I use them only for illustrative purposes. I assumed that you were single as well.

Being single with that high income, is going to push you closer to a 100% plan anyhow.

I am hoping it's not as cut and dry and depends on the district. My payment is over the $489 allowance, but attorney doesn't seem to have an issue with it. Now if I was proposing a 0% payback, they might have a problem, but as long as you are paying a certain level to unsecured, and the amount over the limit is not over a certain amount, they are less likely to object. Maybe you are saying (1) the payout to unsecured must equal atleast what that overage is or you are saying (2) what the DMI computes as with the high payment PLUS the difference in the actual payment vs. allowance - I.E. if the difference was $200 and you DMI had computed to be $200. If it is (1) then the plan would be okay since the proposed payment is greater than equal to the vehicle payment/allowance difference. If it is (2) then the payment would need to be increased to $400 and one would just have to plant a money tree to come up with that extra $200.

I guess I will soon find out if this is true in my district or not. There's not much I can do about it now. I am proposing as much as I can afford and not sit in the house in the dark My house is way over the allowance too, but they don't allow lien stripping in my district . From what I have read the housing allowance being over isn't a huge deal as many districts interpret congress intention to allow the larger of the 2 amounts. I have read some debate that that applies to vehicles too since you are able to enter the actual loan amount. But in actuality if it goes over a certain amount, that pesky "good faith" objection comes up.

Now if the form stated enter your vehicle payment up to $489 and did not get to enter the actual amount further down on the form, then there would be no question that you are stuck paying anything over that out of your other allowances. That would be more logical. But I guess law isn't always logical

[justbroke]

Don't worry about the housing. The first rule of the "fresh start" concept is that the Debtor keeping his residence is necessary for an effective re-organization of the Debtor (that has been litigated, and that's the rule). if I didn't keep my house... I'd be in a 100% plan. Now they get nothing, and couldn't complain about it.

As for the car payment... it will be up to the Trustee or a creditor to complain that your plan is not filed in good faith. They may just overlook it and not bat an eyelash. However, a savvy Trustee, or creditor in interest, should look and see that you should be committing more to the unsecured creditors and should file a bad faith objection to confirmation.

That's me though. I always think of the worse case, but hope for the best.

Also, on the lien stripping issue... you're in the 11th Circuit and Tanner is precedent and the rule in the 11th Circuit. I can't believe your District doesn't f9ollow Tanner (11th Circuit 2001). Maybe no one wants to put up a fight... which costs money.

[TooMuchCredit]

Also, on the lien stripping issue... you're in the 11th Circuit and Tanner is precedent and the rule in the 11th Circuit. I can't believe your District doesn't f9ollow Tanner (11th Circuit 2001). Maybe no one wants to put up a fight... which costs money.

Yeah I find that crazy too, but I can't find any cases in my district that have done it so my lawyer might be right. I haven't seen it mentioned by any of the law firms ads/sites either. Maybe the initial hurdle is set higher here than elsewhere. If you can get someone willing to jump that 1st hurdle it might be doable. I am hoping by some miracle that my Home Equity might lower their rate from 12.5% to close to my 1st's rate of 5.625%. I'd have no problem putting that into the plan and them when my plan is over I could pay off the Equity line faster.

[justbroke]

Yeah I find that crazy too, but I can't find any cases in my district that have done it so my lawyer might be right. I haven't seen it mentioned by any of the law firms ads/sites either. Maybe the initial hurdle is set higher here than elsewhere. If you can get someone willing to jump that 1st hurdle it might be doable. I am hoping by some miracle that my Home Equity might lower their rate from 12.5% to close to my 1st's rate of 5.625%. I'd have no problem putting that into the plan and them when my plan is over I could pay off the Equity line faster.

I now know why there are few... it's because it is by Adversarial Proceeding and not by Motion. Look at this case... http://www.ganb.uscourts.gov/judges/...iew.php?Id=220. These people did win their AP and had the lien stripped... so Tanner is alive and well in your District. The problem remains the AP and the costs or litigating an AP.

First, many lawyers don't want to do APs because of the cost and some don't want to get into "litigation". However, I just reviewed two cases with lien strips and they were all successful in your District.