Would like some advice on vehicle

[dsrnc]

Hello all! I have to say I have learned a lot form reading this forum. I'm not new to the bankruptcy scene. Filed a chap. 7 in 2003 due to many medical bills. Long story short, I lost my job in 2009 and was without income for 4 months. Of course during this time we fell behind on all cc payments. Kept house and cars up to date and are still up to date. After I found my new job, we enrolled into a DMP. Big mistake in my mind! We now can't afford the payments and are looking into Chapter 13 since we can't do a 7 from the previous filing. Here's the question - We have a vehicle that we had a loan on in 2007. A friend loaned us the money to pay off that loan and we are now paying him. (very slowly with no interest) The title is in our name, but we owe him more than the car is worth at this time. How do you think this may be handled in a 13? Any help would be appreciated!

Thanks!

[LadyInTheRed]

Does your friend have a lien on the vehicle? If so, your friend will be paid as a secured creditor. If not, he will be an unsecured creditor and receive a share of whatever is left after paying secured creditors. You can still pay him what you owe him, but you'll to find room in your budget as it will not be deductible when determining DMI available for your plan payment.

The trustee may consider the payments to your friend in the year before filing as insider payments and go after him to return payments to the trustee so that money can be distributed among other unsecured creditors. If the loan is documented, he may be able to fight it. Make sure he files a creditor's claim so he gets a share of anything going to unsecured creditors.

Please stop using credit cards unless you can pay them off each month. In fact, probably better to just not use them even if you think you'll pay them off. It's too easy to make the minimum payment despite your intention when you made the charge. You'll be better able to deal with unexpected events like job loss and medical problems if you don't have credit card payments to make.

[dsrnc]

Thanks for the reply! We haven't made a payment to him in a while, but he is not concerned over it. I know the mistakes I have made, and how STUPID they are. We have been on a cash budget for the past 6 months and are doing ok, just that the debt is more than what we can do a month. We are going to stay cash from now on! I wish I knew this 10 years ago. I am so angry with myself for doing this a second time. I have definitely learned my lesson