chapter 13 filed, but wish to retain vehicle with large payment

[wheel]

Hello everyone, first time poster here. Just found this great forum this morning, and have been searching all day to find answers. Here is the deal:

My wife and I purchased a home in 2005 that has lost nearly half it's value (about 250k). She lost her job and our total income has been reduced by about 60% to 70%. Due to the current market conditions, we obviously cannot sell the house and downsize. So, we have been trying to shortsale. The bank dragged their feet to long with our qualified buyer, who eventually walked on the deal. They set a foreclosure sale date for a week after I found out the deal would not go through. We were forced to file a 13 in order to prevent a 3-day notice on our door.

Now here is my problem: We have two financed vehicles. One of them, we absolutely do not want to let go. We spent the last 10 years building credit and rising through our careers, and now we are losing our home, our credit, all the hard work. All we desire from all of it is to hang on to our little car that we love so much. We owe $30k on it, and it is worth about that much. The problem is the payment -- $725. Our attorney has told us that there is no way in hell the trustee would let us keep this car with a payment so high. After several difficult hours with his paralegal of working up a plan, we agreed to surrender the vehicle, and keep the other car which we really do not want. The payment on the other car is only $455.

The car we wish to keep is my wife's car. I traded my BMW in for a Honda Civic at the beginning of the year in an effort to downsize and save us from financial ruin. I recently purchased a relatively cheap motorcycle in belief that we could surrender the Honda in the BK, and I'd ride the bike every day. That, I figured, was a sacrifice I was willing to make in order to keep my wife's car.

However, the attorney says we can have a car payment of around $500, and a second car payment of around $350. However, a single car payment of $725 won't fly. Whatever, that's stupid if you ask me. The only reason I'm filing is to protect us from a deficiency judgment when the bank sells our house.

I've got half a mind to dismiss the BK right now so we can keep our car, refinance it to get the payment down under $500, then re-file again in 90 days. According to our attorney there is a 90 day window between dismissal and re-filing.

So, does anyone have any advice on what I could do to save this vehicle? It is all that we have to show for all our hard work, and it doesn't seem at all unreasonable to me for us to keep it. Help please? I feel like my attorney is actually against us, and sees us as dirtbags. I think he WANTS us to lose everything because of his political and personal beliefs, I haven't felt good about it since our last visit.

There has got to be a way.

Oh, we are in Nevada.


TIA

[AngelinaCat]

Hi Friend:

Wecome to this wonderful forum. I sympathize very strongly with you and your wife. I myself cannot answer your question at this time, but I will research and get back with you sometime tomorrow. Meanwhile, you will probably get great answers in the meantime.

Good luck!

[chloe0724]

I would think you could keep the car, but you would only be able to count a portion of the payments as your current monthly expenses. IE, you would have to pay more into your plan and cut back on something else if you want to keep the car.

I'm not sure why the car means so much to you given your current situation. Did you file only to save the home from foreclosure? If so, a forclosure it not that much worse on your credit score than a short sale. If you are including other debt in the 13 plan, than it would make sense to take a hard look at your expenses and your prioities.

Not trying to be harsh.

[BK2008]

And isn't 2007 & 2008 the gov't enacted the debt forgiveness act??
Is that only for mortgages that had rate resets?? If you qualify under that plan, you might not get stuck for the balance deficiency. Someone better versed in that might come along shortly.
I don't know...personally, I'd rather try and save my house and get rid of the car.
You can always get another car at another time, a home might take you longer to qualify if you end up losing it.

JMHO

[wheel]

Thing is, I can't afford the house. Even if the second was wiped out, the payment would be over $3k, plus $500 a month in the plan to catch up on missed payments.. for the next 5 years.

I don't care about the house. The car is what I want. I can afford the car. I have about $30k in credit card debt, but I don't care about that either. I don't mind paying that back. I did, after all, spend that money. The problem is that the bank can sell my house for $250k and then sue me for the remaining $280k. The two reasons I filed were:

1: Keep the bank from putting a 3-day notice on my door when I only had a couple days notice that they set a forclosure date. We need more than 5 days to find a rental and move.

2: Protect myself from a quarter-million dollar deficiency judgment.

That is pretty much it. Sure, all my debt has to be included in the chpater 13. There is no way around that. Sure, if I agree to the plan as my attorney drew it up, my payment will be $250 in the plan for the next 5 years and at the end of that, the Honda will be payed off. Thing is, I don't want the Honda. It sucks.

Our Mini Cooper was the car my wife always dreamed of owning. It was ordered from the factory with the individual items and options she chose. It is one-of-a-kind, and we've made many friends in the Mini community (it's like a cult). We just really don't want to lose it. I've put a lot of time into suspension and chassis upgrades. I love the little thing.

It just doesn't make any sense for me to have to give up the car. Sure, I know, it's just a car. Just stuff. Who cares right? Well that is where I'm at. Please, no lectures. I've already been through that with my attorney. These are hard times, as I'm sure you understand. I am only asking for suggestions and solutions that will help me get what I want.

All I want is to keep this car, and I have no problem paying for it. I don't care how creative I have to get, that is what I want.


edit == by the way, the debt forgiveness act only applies to the tax liability that was formerly present when someone sold a house for less than it was worth, and the lienholder forgave them of the debt. Previously, you'd have to pay taxes on the forgiven amount, as it was considered income. Now, even if you were not insolvent (existing tax law allowed for debt forgiveness to insolvent people with no tax liability) at the time of forgiveness, you will not be taxed on the difference. That is how I understand it. There may be something else I am unaware of. Donno.

[chloe0724]

Then I'm confused. Are you planning on getting rid of the house? If you can't afford it, how are you going to pay the payments to the 13 plan?

[BK2008]

Here's a thought?? Can someone (family, friend) pay off your loan for the car you want, and then have you make payments directly thru them? This would get the loan out of your name, the title would go to the 'new owner', and a new registration would be drawn up with you/wife as the registered owner, and the 'new' owner as lien???

[gymbo]

Welcome

Hello.

You are going to get many people saying "Give up the car. Give up the car. Give up the car."

Just warning you.

To many people... $750/month is a house payment.

But I am not trying to judge. If you sacrifice your house and other car, seems to me, keeping the car is a fair trade off. But I'm not a trustee. I just wonder if you made the emphatic pitch to him/her like you did on this board, maybe they would go for it? Can you afford that payment and rent?

If you were filing Ch 7, I could understand why they would oppose... but in a 13?

I am new to this process so, sorry I cannot offer any better advice... I will say, it might be worth it for you to consider getting a new attorney if that is at all possible. Doesn't sound like yours is on your side. Other attorneys might have a better idea of whether a trustee will allow people to keep pricier cars in some circumstances.

Best of Luck to you!

[wheel]

Then I'm confused. Are you planning on getting rid of the house? If you can't afford it, how are you going to pay the payments to the 13 plan?

Yes. The house will be surrendered. I don't understand what you are asking. My mortgage after stripping the second would be three grand. Add in the late payments and thats right back up to nearly 4 grand a month for the house and the plan payments, plus a car note and bills.

If I surrender the house under the 13 plan, I can rent a home and exempt 1300 for rent. That is almost exactly what we'll have to pay. My payment under the plan that will be most likely approved will only be $250.



That is with the honda and it's $455 payment. The Mini is only $275 more per month, and at my level of income, totally affordable. I'm afraid we can't "sell" the car to anyone, even if they pay off my current load, because we've already filed.

That is what I'm asking. How do I get creative to keep the car? That is all I want to keep.

edit -- Okay, to give some perspective. I make between 80 and 90 grand per year, plus my wife's income which is minimal right now. She's working part time and going back to school in the fall. Our gross income before she lost her job and things changed for me at work was close to 200k per year. our mortage that we kept current for 2 years was 4 grand. So put that $725 car payment into that perspective. I net between 4 and 5 grand per month. Am I making more sense now?

[chloe0724]

Sorry,

Like I said before, you should be able to have the car payment, but have to commit to paying a higher monthly payment to the Trustee. I just don't think they'll go for a $750 car payment and $1300 rent. It doesn't seem to be inline with most standard expenses.

[BK2008]

Anyway of coming up with some cash to put towards the loan, and have the lender 'reamortize' the loan to get a new payment amount for the remaining term?

[wheel]

Anyway of coming up with some cash to put towards the loan, and have the lender 'reamortize' the loan to get a new payment amount for the remaining term?

The lender is a credit union, and they don't do that. We checked.

Chloe, my point is that they will allow over $800 in car payments, and they will allow $1300 in rent. Rent and car payments are not related. The rent is the rent, regardless of teh car payments, and $1300 is what they will allow. What I don't understand is why they will allow me to have two car payments totalling over $800, but not a single payment just over 700. Especially when I'm sacrificing comfort to do so. I'm commuting in Las Vegas on a bike, when it's 115 out.

[justbroke]

[keepmine]

It was foolish to file a 13 to begin with if the reason was to halt a foreclosure.
What's wrong with storing stuff with a moving company and living in a hotel while you find a new place? As to the possibility of a lawsuit-that's way in the future if ever. Lawsuits are an expensive and inefficent way to collect high dollar debt. The creditor knows a bk is very likely if they sue so they usually do nothing for a longtime.
You're in this deep, I'd not dismiss. It'll be on your credit report for 10 years if you do.
I'd suggest you focus on what you do have and quit worrying about giving up an expensive car. You have reliable transportation and that's more than many in a Chapter 13 can say.
What is your projected payback to unsecured creditors?

[bcvw]

I don't understand why you can't keep the car, even with a high payment. It's a secured asset and if you've got the income to support it, what difference does it matter in a CH13?

Secured creditors take priority over unsecured. I don't see where the trustee would care if the payment were $725 or $125. The trustee's job is to ensure that secured creditors get paid first and that's the case here. If you can support a plan that includes that amount, then all should be good.

It seems that some are confusing the means test limits with the actual plan.

I think you need to consult another attorney.