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Getting ready for Ch 13? Stop paying credit cards? Buy a dependable car?

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  • Getting ready for Ch 13? Stop paying credit cards? Buy a dependable car?

    I am relatively current on all debt, but definitely sinking (expenses > income).

    Going to file, but the timing is everything. Looking at holding off for three months while I get a few things in order.

    Currently driving a 12 year old rusty car with 163,000 miles on it. The attorney suggested I get into a newer car right away, just not anything over the top or obnoxious.

    I have two kids that live with me, so I really need something dependable.

    Still, nervous about buying a newer car - this would be a big deal for me anytime, let alone at the same time that I am about to file for Bankruptcy.

    I'll have to stop paying credit cards right away - to come up with a down payment on a car, money for the attorney, and to start saving for my property taxes - the car, mortgages, and the taxes will remain outside of the CH 13 plan, from what I understand.

    Am I missing anything obvious here? Is it OK to just go out and try to get financed for a newer (but used) car, ASAP, before my credit rating starts plummeting?

    The attorney seemed to suggest that I should stop paying my unsecured debts to raise the money I need. But I was a bit overwhelmed at the meeting and want to be sure I am on the right track.

    Any help at all would be much appreciated. Thanks.

  • #2
    sounds like the right track, CH 13 is a long 3-5 years, you need a new car. don't keep throwing money at the credit cards unless you plan to do a 100% payback plan, only then it might make sense to keep paying on them.
    Filed CH 13 September 17, 2007
    Plan Modified July 8, 2009 from $1100/month to $400/month due to change in income, finally discharged in July of 2013!

    Comment


    • #3
      I agree.

      The trustee isn't going to object to a newer dependable car. Especially if your old car is a sinking ship. Go get something that is dependable, easy to insure and will last you 3-5 years. Also, stop paying the cards immediately. Don't use them any more. Just by stopping payments to the cc's will result in some pretty quick cash.

      It sounds like your attorney has you on the right track. Have some faith...go get a new car and buckle down for the ride...

      Good luck.
      Filed - 12/24/08 (Merry Christmas Credit Cards!)
      341 - 2/5/09
      Confirmation - 3/13/09....Happy Dance!!!

      Comment


      • #4
        My husband and I have followed similar advice. I read it first on this site though. I asked our attorney about obtaining a new vehicle while our credit was still good and she thought it was a smart thing to do especially when I told her we qualified for either a zero percentage rate or 1.9%. We left the meeting with her and purchased the new car.

        We were also advised by our attorney to stop paying the credit cards as well. Our goal is to have her retainer paid, the filing fee saved for and a few other necessity items we know we'll need to take care of around the house to set ourselves up for the 3-5 years we'll be in our payment plan and then file early June.
        Filed: 8-19-09
        341: 9-21-09
        Notice of Discharge: 11-28-09

        Comment


        • #5
          Same thing with us, our attorney suggested we get a new car to last us the duration of our ch 13 and stop paying the ccs that day. We ended up purchasing a new-used car and traded in my 13 year old truck with 240k miles. Your attorney is sending you in the right direction...
          May 2008 Hired 1st Attorney/Stopped paying CCs
          May 21, 2009 Retained 2nd Attorney
          May 28th - Filed for Ch 7 (FINALLY!)
          9/11/09 - DISCHARGED!!!!

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          • #6
            With the interest rates so low or ZERO for a new car...that's what I would do, with the warranty and all it's worth it. Just get a small SUV so you have the room for the kids or a small 4 door. Take advantage of those interest rates NOW! Most Auto Dealers are hurting to get rid of them right now!
            Filed: October 1, 2007 341: December 10, 2007
            CONFIRMED: December 10, 2007
            Payment: $825 / Mo. for 5 Years-29 MONTHS OF Pmts Down 23 to go!

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            • #7
              I bought a new car recently and am regretting it now (i think). I traded in an SUV that I was upside-down on by about $6,000. I got a great deal on a CTS that I worked the price down to about $41,000. After the negative trade-in and taxes, the total loan came out to $47,000 @ 6.79% for 6 years.

              I am now planning on filing for Ch 13 in about 6 months. I don't own a home anymore...I rent. I am going to stop paying my CC's ($117K in unsecured debt, $13500 in 2008 taxes and a 401K loan), but intend on paying the new car payment ($770/month).

              I know I could have gotten a much cheaper car, but I didn't...so, my question is...will I run into issues 6 months from now when I file because of the newer car loan?

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              • #8
                Probably not. You may even be able to cram down the loan on the car to what it is worth and maybe even a lower interest rate...depending on your district.

                Good luck.
                Filed - 12/24/08 (Merry Christmas Credit Cards!)
                341 - 2/5/09
                Confirmation - 3/13/09....Happy Dance!!!

                Comment


                • #9
                  Originally posted by EricaCallaha View Post
                  Probably not. You may even be able to cram down the loan on the car to what it is worth and maybe even a lower interest rate...depending on your district.

                  Good luck.
                  This is a bit of a relief to hear your thoughts.

                  What should be used to determine the current value?

                  Comment


                  • #10
                    I am not sure how they do the cram down. Others have done it here and would be more insightful than myself. We were exactly even on our car. To determine the value we used NADA on Fair Condition Private Party Value. Your lawyer would know what flies in your district.

                    Good Luck.
                    Filed - 12/24/08 (Merry Christmas Credit Cards!)
                    341 - 2/5/09
                    Confirmation - 3/13/09....Happy Dance!!!

                    Comment


                    • #11
                      You can only cram down car loans if you bought the care more than 910 days before filing BK. So that definitely needs to be taken into account. The determination of what the car is worth will probably be a negotiation, but the blue book values will be the starting point. (you'll suggest the private party resale value, the creditor will suggest the car dealership cost, you'll hopefully be able to work out a compromise in the middle.) The part of the loan that is deemed "unsecured" after the cram-down will then receive the same % as the rest of your unsecureds in your CH 13 BK.
                      Filed CH 13 September 17, 2007
                      Plan Modified July 8, 2009 from $1100/month to $400/month due to change in income, finally discharged in July of 2013!

                      Comment


                      • #12
                        The negative trade-in was a mistake, if your existing car is upside down you should just finance a new car and surrender the upside down car, not roll over the deficiency into the new loan.
                        filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!

                        Comment


                        • #13
                          Originally posted by catleg View Post
                          The negative trade-in was a mistake, if your existing car is upside down you should just finance a new car and surrender the upside down car, not roll over the deficiency into the new loan.
                          My attorney said if I was going to keep the car the negative equity I originally added to the vehicle when I purchased it would be removed during the bk; therefore, I would only be paying what I paid for the vehicle and not any extra I originally rolled into it from the previous vehicle... You should ask your attorney if that will be the case for you as well when you are ready to file.

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