Wife's bonus - Finance car or purchase with cash

[Wingsfan1991]

Hi All!

My wife will be starting a new job at the beginning of May. The job includes a $7500 signing bonus.

We have only one vehicle at the moment. It was purchased 6 months ago and has little to no equity.

We have a family of 5 and really need two cars. If we used the bonus to purchase a car outright would it be safe
during our chapter 7 or would they make us sell it?

We had a car repo'd 6 months ago....we are behind on all credit card payments also. I do not believe we would
be able to finance a second car at this point.

We do not need the house exemption. Our house is current but it's worth much less than we owe and will be
letting it go in the chapter 7.

We plan on filing Ch 7 at the end of the year....we will need to wait until the signing bonus is past the 6
month timeline to make sure we pass the means test.

[justbroke]

It all comes down to three things; exemptions, exemptions, and exemptions. If you are unable to exempt the cash and/or the a car with $7,000 in equity, then it is at risk in the Chapter 7. The nice thing about bankruptcy in Michigan, is that you can choose between the Federal or Michigan bankruptcy exemptions.

Should you choose the Federal exemptions and file together, you could have over $23,000 from the unused homestead exemption plus any other exemptions specifically to cover the cars, furnishings, money in the bank, and other property. (When you don't use the Federal homestead exemption, you get to use $11,800 per debtor -- husband and wife can combine -- to protect any property. It acts as a wildcard exemption.)

I would surely be remiss if I didn't advise you to review the available exemptions before purchasing the car with cash. It's not because I like writing "talk to an attorney" but the fact is that you actually have assets to protect! My first glance is that you'll probably be just fine. Are you planning to hire an attorney?

[Wingsfan1991]

Thank you justbroke!

We are currently in Michigan but will be relocating to florida for the job.

It looks a bit confusing....from what I've read...if we're not in Florida long enough we may have to use
the Michigan exemptions unless I reading it wrong...which is very possible

We won't have much cash to exempt. And we don't have any extravagant furnishings....no RV's, boats or anything
like that.

We will definitely be using an attorney. As suggested in other posts we will go for some free initial consults and find
someone we are comfortable with.

[justbroke]

Florida has horrible bankruptcy exemptions. Coming to Florida with a car with $7,000 in equity is going to have the Trustee so excited to meet you. Depending on how much other property you have, and if you both file together, there's an unused homestead exemption here that is $4,000 per debtor ($8,000 combined). It's not as gratuitous as the Federal exemptions. Also, our vehicle allowance is a measly $1,000 per vehicle (per debtor). Our home furnishings allowance (personal property), another $1,000 per debtor.

You'll probably be okay with the Florida exemptions. Whether you can use the Florida exemptions is another story because it will depend on your residency. You'll likely use the Michigan exemptions if you filed after moving to Florida this year.

[Wingsfan1991]

Wow those really are terrible.

We will be renting. What effect will that have on the homestead exemption?

As far as furnishings, our stuff is about 5 years old. The kids all have normal bedroom furnishings that are old. Our living room tv is 8 years old.....not living the high life anyway lol.

It just seems crazy that they would take our car to distribute the proceedings and then we'd have to turn around and buy another car....but that's the govt.

We will be filing together also so that will give us a bit more for exemptions.

My wife has filed Ch7 before. She cannot receive another discharge until June of 2018. We are just crossing our fingers that we don't get sued before
we can file. If we do I guess we'll end up in a chapter 13 and have to convert it to a 7 when eligible. Not sure how long it takes in Florida as far as how long it takes between
filing and getting a discharge but in our michigan county it's taking about 6 months from what I have read.

Thank you so much for taking time to answer my questions!

[justbroke]

We will be renting. What effect will that have on the homestead exemption?

Not in a bad way. Because you won't use or receive the benefit of a homestead exemption, you get to use the $4,000 (per debtor) "unused" homestead exemption as wildcard exemption.

As far as furnishings, our stuff is about 5 years old. The kids all have normal bedroom furnishings that are old. Our living room tv is 8 years old.....not living the high life anyway lol.

Yard sale prices!

My wife has filed Ch7 before. She cannot receive another discharge until June of 2018. We are just crossing our fingers that we don't get sued before we can file. If we do I guess we'll end up in a chapter 13 and have to convert it to a 7 when eligible. Not sure how long it takes in Florida as far as how long it takes between filing and getting a discharge but in our michigan county it's taking about 6 months from what I have read.

If she filed before June 18th, then you couldn't convert to a Chapter 7 because you would have to wait 8 years from filing date to filing date. A converted case is considered to have been filed on the date the case being converted was filed.

Anytime and welcome to the Forum.

[Wingsfan1991]

If she filed before June 18th, then you couldn't convert to a Chapter 7 because you would have to wait 8 years from filing date to filing date. A converted case is considered to have been filed on the date the case being converted was filed.

Anytime and welcome to the Forum.

Very good to know thank you!