Can we really buy a new vehicle right before filing 13?

[sheilaE]

We will soon be filing in Central CA. I want to see if I could get some advice/comments on how buying a new car right before filing chap 13. Our truck has just about had it-lots of problems-it's been in the shop for repairs twice within the last few months. Last bill was $900.00.
I've been posting questions on this wonderful forum and have gotten some EXCELLENT advice! We've meet with an attorney, whom my husband & I both like. I've emailed questions to him and he's responded, but I guess I reached my "free" limit because he just emailed me back and said I needed to call and schedule a 15 minute phone call so....before I do that and get billed, I want to get some free advice here first.

1. Has anyone purchased a new car when getting ready to file?
2. We haven't paid our cc since Dec-so our credit report is already shot. What finance companies will not shove us out the door once they see the credit report?
3. Should we explain about the chapter 13 payment plan to them? Will they already know about it?
4. Can we really do this without getting in BIG trouble with the trustee?
5. What amount can we spend? I know we can't go get my dream Lexus, but can we replace our truck?
5. If I understand this correctly then the auto payment is put into our repayment plan. The payment will not sky-rocket because we bought the vehicle right?

Thanks!

[LadyInTheRed]

You may find a couple of responses to my thread about financing a car before Chap 13 helpful: http://www.bkforum.com/showthread.php?t=53787

I know it sounds too good to be true, but buying a car before Chap 13 is a valid planning strategy. Every situation is different, so clear it with an attorney first! Piece of mind and avoiding a mistake will be worth the cost of a 15 min consult.

After talking to an attorney, I will be buying a modest new car rather than relying on an 11 year old truck for the next 5 years. And, I'm keeping the truck so we will finally have two cars in our two adult household (if the truck breaks down, we'll put it in the garage until we can pay to fix it). The attorney said I would pay the car payment outside of the plan, but that could vary by trustee. The payment will reduce the amount I pay to the trustee. I need to make sure my payment and new insurance premium isn't so high that the secured creditors get nothing. But, as long as they get a "token" (attorney's word), I'll be okay. This was the second attorney who told me to go ahead and buy a car. I will try to wait 90 days after the purchase to file, but that's my own decision, not the attorney's advice.

My credit score is still in the mid 700s since I'm still current on everything, so I don't have the credit problem. But there are a lot of ads on the internet for car financing for people with bad credit. For instance: http://www.carloan.com/bad-credit-car-loans/index.html You'll have a high interest rate, which means less to your unsecured creditors. Don't apply to too many places or your rating will go down more. But, you might as well try to get a loan rather than assume you can't.

DO NOT tell lenders or the dealer that you plan to file bankrtupcy! If they don't already know how a Chap 13 plan works, the creditor can consult with its attorney after it receives the notice that you filed.

[Universal]

Things are so different in each location. For our 13, my attorney asked if I'd had my car at least 2-1/2 years as I wanted to keep it.

[LadyInTheRed]

Things are so different in each location. For our 13, my attorney asked if I'd had my car at least 2-1/2 years as I wanted to keep it.

That question probably had to do with cramming down the loan. If you purchase a car 2 1/2 years before BK and owe more than it's worth, you can cram down the loan to the value of the car.

[SMinGA]

I would not suggest you tell a car place/potential lender you are thinking about bankruptcy. First of all, as long as you're not planning to default on the loan you're about to take out (and including it in ch. 13 is not defaulting) then you're doing nothing wrong.

Having reliable transportation is a good idea in a ch. 13. Having major car repairs can wreck havoc on your budget, and that is not good for a 13. Buying a reasonable car so that you can have reliable transportation should not be a problem. Overspending however might be. I can't really define overspending - it will vary by the person & district. It would need to be a vehicle that would 'fit' your family of course.



The chapter 13 payment should be set by your budget. Secured & priority debts get paid first, unsecured gets what is left - if anything. Having alot of secured and priority debts can create a 'minimum' amount your plan needs to pay. If you

[Faust]

We bought one but we filed 7.

[momofthree]

Don't tell the lender about the bankruptcy. That is a big scary word to creditors.

You are allowed to have a payment of up to $489/mo. Keep it below that and you'll be fine.

We bought a 2010 minivan approx 6 months before consulting with our attorney, financed $28k at $468/mo. He didn't bat an eye. We did buy it when our credit was still in the high 700s though, so we didn't have lender issues. We purposely bought before our credit went to hell.