Can I keep my vehicles as long as I make the payments??

[patch1033]

Here is my situation

I have a job where I make approximately $3500 per month before taxes, around $2,200 after taxes. (Salary).

I have two vehicles:
#1: Purchased the vehicle new in October 2012. Owe approx. $27,000 on it, and it's "Blue Book Trade In" value is around $15,000. Payment is around $450.00. This loan is through a credit union that I have no other accounts or connections with.
#2: Purchased the vehicle used in October 2013. Owe approx. $9,000 on it, and it's "Blue Book Trade In" value is around $6,000. Payment is around $200.00. This loan is through another credit union that I do my normal banking with, and I have an unsecured credit card at around $5,000 worth of debt on.


Along with that, I have just under $30,000 worth of unsecured loan debt. (All are credit cards except for one "Debt Consolidation Loan" that's around $5,000.)

I also have student loans (through the Federal Student Loan program) that I owe approximately $5,500 on.

All of my payments for my loans and car loans are on time, and I've never been late or missed a payment.

I've been living paycheck to paycheck, only able to pay rent (I rent a room from a friend), pay all the minimum payments on everything (just shy of $1,000), and pay my utilities, I have enough money to pay for my gas to get to work and back (approx. $450 per month) and buy a little bit of food.


I'm considering bankruptcy because I just recently had a major problem and I'm not going to be able to make these payments. I might even be looking at loosing my job...


If I am not loosing my job, I'd really like to keep my two vehicles. I'd be able to make the payments, and I need them to get through my 140-mile daily commute to work. As long as I keep making the payments and keep the loans, can they be excluded from a bankruptcy and I can keep them?

Does anyone see any problems with me filing for bankruptcy or have any tips?

[Northstar]

Hi Patch1033,

I'm assuming you are single with no dependents? Full disclosure, I am not entirely sure what the income guidelines are in CA, but it appears your income would pass the means test for a Chapter 7. I just question the need for two vehicles, even if you keep your job? The first one is very underwater, and the second one is much less so. Factoring in insurance, fuel, maintenance, etc. it seems like vehicles are a big percentage of your expenses. If it were me, I would surrender the first, and if the second is in good mechanical/running condition, I'd keep that one. The unsecured debt will be wiped out in a Chapter 7, the federal loans will not, but $5500 isn't a huge amount. If you decide to file (after consulting 2-3 attorneys), stop paying on all unsecured debt, and save that money to pay your legal fees. You may also want to look for a place closer to your employer, if you are able to keep your current job. 140 miles per day round-trip is excessive and costly. If you decide to file bankruptcy, use this opportunity to make positive changes in your life. That's what I am doing. Working hard and having nothing to show for it, and being deep in debt, is no way to live!

Good luck, keep your head up, and make the right choice for YOU!

Peace.

[keepmine]

The IRS standards for auto expenses are right at $500. So, while you could keep those cars you won't be able to use the total $650/month payment as an expense.
You need to look at the paperwork from the CU where you have a car loan and a cc. If it contains a cross-collateralization clause, to keep the car you'd also need to reaffirm the cc.
Best bet is speak with a fewe bk lawyers. Most will give a free or lowcost initial consultation.

[TXskyblue]

I thought the trustee would object to more than one car for a single filer. I guess I never read that but just assumed it.

[bcohen]

Even if the first vehicle were not underwater, a $450 payment on a $2200 monthly take-home is absurd. That does not even include fuel, insurance, maintenance, and repairs! Considering that the loan includes $12,000 of negative equity, it's a "no-brainer" to stop paying and let the car go. If you file for bankruptcy before the car is repo'd, you will be able to drive it payment-free for the duration of your case, which is about 4 months. (You will, of course, have to keep paying for insurance though.)

The second car, with a $200 monthly payment may be worth keeping if it is in good condition, and runs fine. However, since you also have a $5,000 credit card debt at the same credit union which holds the car loan, it is extremely likely that the loans are cross-collateralized, which means that you would need to reaffirm the credit card (which would be insane) in order to keep the car.

It is probably in your best interest to quit paying the car loans, and prepare to file sometime between 30 and 45 days after the payment was due, because the lenders are unlikely to repossess before 60 days late, and this will maximize the amount of time that you are keeping the cars, and driving them without making the payments, thanks to the automatic stay. Since California provides generous exemptions, you can start saving up the money which you would have spent on the car payments, and by the time your case closes and the repo-man comes and collects the cars, you should have at least $2500 saved up, which can buy a pretty decent used car outright. A Toyota Corolla/Geo Prizm, Ford Escort, or Ford Contour from the late 1990's could be purchased in excellent condition for less than $2500, and as long as the car has less than 150,000 miles, you should be able to drive it for many years to come.