Two cars and BK exemptions

[treehugger1]

I'm curious as to others' thoughts related to a single person filing BK and having two cars financed. If the equity value of both cars combined does not exceed the state Bk exemptions, is one allowed to keep both cars? I live in a part of the country where it is a long drive to anywhere. I bought a Corolla to cut down on gas costs and I'll be putting 8000 - 12000 miles per year on this auto in non-winter months. I also happen to live in a part of the country where the roads are treacherous in the winter, so I have a 2001 Subaru that I use for transportation of about 6000 miles per year. Would I be allowed to keep both autos? If I refinanced the Subaru about 5 months ago, will this look bad? I did so as part of my ongoing attempt to stay out of a chapter 13.

[bige1030]

It depends on your state's exemptions. Some states only specify an amount, while others specify that you can keep up to a certain amount in 1 vehicle. Also, it shouldn't look bad that you refinanced five months ago if you don't do too much to damage the creditor's position.

[treehugger1]

My state allows $2150 one vehicle. Does this make a difference in "keeping" two cars? Would I be forced to give up one car even if it is secured in a 13? In a 13 are you allowed to keep all your secured property? Just wondering.

[bige1030]

You can keep both cars as long as you pay to unsecured creditors (through the plan) at least the amount that's non-exempt. For instance, if car A has $1500 equity and car B has $1000 equity, you can claim the $1500 equity in car A as exempt, but you'll have to pay at least $1000 (car B's equity) into the plan for unsecured creditors in order to keep your other car.

[treehugger1]

Thanks. Now, what if I don't have any equity in either car? If my intent is to keep both, I'll have to continue making payments on the newer car, but I could possibly get a cram-down on the older car (I believe the new BK law refers to new cars purchased after 10/05)? Does this sound correct?

[SinkingFast]

You can possibly strip or cram down the loan to the secured portion if you've owned the car 910 days. At least that was the intent of the Law. But evidently the writing of the Code was such as to leave a dangling paragraph.

http://bapcpa.blogspot.com/2006/04/a...y-vehicle.html

[treehugger1]

Wow. Pretty amazing disagreement and inconsistencies related to interpretations from that blog. Talk about "word-smithing." I'm beginning to think that by the time I actually have to make a decision about BK, there coul dbe even more confusion. Perhaps, the more the merrier. LOL