*New car prior to filing bk 13 question*

[rjl0206]

to all,

I 've read about getting a new or fairly new/used car prior to filing. My credit is pretty decent as of now, I have been advised to change up my 98 altima beater with 100k mile that seems to require more and more fixes. I wanna ask what are my limitations in terms of what or how much car can I get? I know not to get a luxury car or anything crazy, but my wife and I has always looking been looking into the honda pilot, will the trustee have a problem with this when I file in about 4 months? thanks

Ray

[optimistic1]

It actually might help you. I was instructed by a former attorney to buy a new car if I was going to do a Ch. 13.

Because, when you are in the plan, you can still get a new car if worse came to worse, but, you would be under scrutiny as to how much you plan on borrowing and paying per month. In addition, your interest rate would be less favorable then before you filed. So you might end up having to buy a used 2-5 years old car at a price of less than 5-20k or so. I read a post about this very topic that the only loan that they could get had a interest rate of 22.50%, how ridiculous.


The means test for Chapter 7 debtors and the disposable income calculation for above-median Chapter 13 debtors take account of car loans in a peculiar way. In calculating the expense deduction for secured debts, you must add up the payments for the next 60 months and divide by 60 to calculate the deduction. To see how unfair this is, imagine that you have just 6 more payments to go on a car that’s almost 5 years old. You will be allowed to deduct just one-tenth of your actual monthly payment in figuring out the means test, even though you will probably have to buy a new car within the next few years. A bankruptcy lawyer is not, however, allowed to advise you to buy a new car before filing, because Congress has seen fit to forbid “debt relief agencies” from advising someone to incur new debt. You might never understand this problem if you hadn’t read about it here.


So, you might ask an attorney, but he might not tell you yes or no.

Wait for more posts, other people on here have lots of information.

[tazzy20176]

I bought a new Toyota in Oct 08 and filed in November. I was downsizing from a Mercedes. At my 341 meeting, the trustee never asked about my vehicle. Although my payments increased a little, I needed a reliable car since I knew my credit score would be low once I filed. My attorney just stated not to get another Mercedes.

[optimistic1]

I bought a new Toyota in Oct 08 and filed in November. I was downsizing from a Mercedes. At my 341 meeting, the trustee never asked about my vehicle. Although my payments increased a little, I needed a reliable car since I knew my credit score would be low once I filed. My attorney just stated not to get another Mercedes.

Tazzy, just a FYI, this is a question about filing a CH. 13, I noticed your profile states you had a Ch 7.

Im not an expert, but it may have a different effect on things, but dont quote me on it.

[liz417]

Hi,

We were advised to purchase a new vehicle before we file our ch 13 case. I purchased a used (1 year) Honda before my credit took a dump and my '95 Toyota 4Runner had 240k miles and wouldn't last the next 5 years.

Good Luck!

[Flamingo]

After going through a Chapter 13 with 3 year old vehicles going into a 5 year plan, if you feel your vehicle will not make it through 3 to 5 years, by all means, do what you have to or can do prior because car repairs can be expensive trying to keep older vehicles going...

[DYLAN150]

How's that work when you have a lease that will expire in 20 months?

[optimistic1]

If I was you, I would get out of the lease before filing and actually finance a car.

[gettingby2008]

Dylan-We were in a lease we surrendered the vehicle and purchased a new one before our credit took a dump. We were approved by Cap One Auto at 5.8% for 60 months. We will add the dificient balance of the lease to our unsecured creditor amount.