Chapter 13 Asset Question

[USCGrad90]

I am about 9 months into my filing. About 3 months ago my car was totaled. I owned the car and it was considered d accepted as an exempt asset because of the low value. The insurance company surprisingly gave me a pay out on the vehicle about 1000 more than what it was listed on the filing and more than the allowable exempt asset value. I used the bulk of the money to purchase a small truck and the remainder to get stocked back up on food and other household needs while my wife was out of work. Looking at my filing paperwork it indicates that I should not "buy or sell" any property or autos without approval of the court. At the time I did not even think about the filing or that this may be considered a "sell" or "transfer" of an asset. Is this something that must be approved by the court and trustee or is it not considered because it was listed as an exempt asset?

[rrockinggramma]

I would be asking your lawyer. But because it was exempted and wasn't included in your plan anywhere payment wise or budget wise and you obviously needed a car to live, I would guess you would be ok. But only your lawyer knows that for sure. The approval process is if you are adding new debt to your plan, which you did not do.

[USCGrad90]

OK - thanks - I assumed that the "selling" and "buying" was directed more at financing a debt or making a change in an item that is part of repayment, which is a direct reflection of the means to pay. I had planned to call my lawyer today to run it by her, but also thought some input from people with experience wouldn't hurt.

[lrprn]

As Rockin' suggests, tell your lawyer right away about the car change and follow his/her advice.

I'm guessing that at the very least the trustee needs to know that the original car is no longer a part of your plan and get information about the replacement car.

I'm not a lawyer, but the one issue I can think of that may be a problem is if the new truck has more equity than your state exemptions can cover and that perks up your trustee's interest. The extra $1K over your exemption value may be a sticking point as well. Your lawyer can advise you if this is the case. Hope everything goes smoothly for you!

[USCGrad90]

As an update - my lawyer told me that this was not a problem. The fact that I paid cash for the vehicle and did not incur new debt was the major consideration as well as the fact that the old vehicle had no liens and was not a consideration in the repayment of my debts under the plan. The truck is also under the limit for state exemptions. Appreciate everyone sharing their insights!

[rrockinggramma]

that is good to know. I have done a lot of "cash" transactions also that are not figured into the plan etc and it makes sense that as your vehicle was not figured anywhere into your plan, just exempted etc that a cash transaction would be ok. Glad it worked out for you.