Car loan question

[mkstlowe]

What if your car loan is financed through your parents. What i mean is my parents paid for the car, and we wrote up a legal documents showing me responsible to pay them back at such amount each month.

can this be placed on my monthly expense?

[justbroke]

Not unless they actually recorded a lien with the State agency responsible for issuing titles in your State! In other words, if your parent's names don't ALREADY appear on the lienholder line on the vehicle's title, then you can't claim it as an expense.

Furthermore, your parents would be unsecured creditors, and the car could be subject to sale by the Trustee if you can't exempt the entire value of the car.

Just because you signed a promissory note (papers), doesn't mean that your parents perfected their "security" interest in the vehicle. The "security" interest is what allows them to repossess the car should you not pay.

Make sure you re-examine the title. If it's not right... don't try to fix it. It's too late.

Did they get a vehicle loan to purchase this car, or did they pay cash? Is your name or their name(s) on the title? Is your name or their name(s) on the registration? If your name or their name(s) on the insurance?

[mkstlowe]

We are in a Chapter 13. We have 2 vehicles. So are you saying we won't be able to keep it and continue to pay my parents. Every where i read im allowed a car and him. Is that not so now?

[justbroke]

You are allowed a car if you are legally responsible for paying a "secured" debt on the car. If the car has no lien on it, then it is owned free and clear.

After re-reading, it may be that your parents haven't bought this car yet? If they are going to do this, you FIRST and most importantly, need Trustee permission in order to incur new debt (period). I did not know that you were in a current and active Chapter 13. As such, you are not allowed to incur new debt without permission.

Once you get permission from the Trustee and Court, you can then get a vehicle. If your parents want to finance the car, that's fine, but the paperwork will need to be good and they will need to file a lien with the agency responsible for titles in your State and "hold" the title until such time that you pay off the vehicle.

What are you really trying to do? I'm sure I'm missing a lot of detail about what is going on. Forgive me if you've posted about your situation on here, but I don't recall reading about this particular case.

[mkstlowe]

The truck is currently leased. The lease is going to end prior to the bankruptcy being completed, I"m sure we won't get approved for anything at this time. If we can't get something one of us will have to leave our job. Which will make matters worse.

My lawyer is pushing this to happen now! Lease is up in October. I'm not doing anything that i'm not told to do, trust me!

So this is not new debt, it's still the payment I have in the plan. The lawyer wants it financed. So if my parents can get it approved and then draw up documents for us to "have to pay" will this be allowed you think?

I do have a call into my lawyer to see what he suggest. Where we got the car, told me today they won't get me approved right now. Money down and co-signer they can't.

[justbroke]

If you are in an active Chapter 13, and are pre-confirmation, this may be why he's trying to hurry you up. Are they buying a "new" car or just buying out the lease? If they are buying out the lease, I don't see how the payments are the same. I think I understand what your attorney is attempting to do, and that is to make sure you have the payment on the truck still counted as "not" disposable income.

I want interfere with this, but you need to have all that paperwork correct. It is in fact "new" debt because you'd have a "new" creditor. Perhaps your attorney is going to deal with that aspect, or the fact is that you're not in a confirmed plan, so it's okay right now. As I wrote, I have no clue what stage of Chapter 13 you are in. My answers are specific to being in a confirmed Chapter 13 plan.

[mkstlowe]

Our plan is NOT confirmed yet. We just want to keep the truck but we of course don't have the money to buy it out. So we have to finance it to keep it. Of course I"m NOT doing anything my attorney not telling me to do.

As for the payment we are trying to finance it for same payment or lower. Which is $500 currently. Not saying it will be 100% the same, but close to it.

Issue really is getting some one to lend me money. My mom offered to co-sign but the dealer still not interested in me. So not sure why my options are. I do have a call into my attorney for his advice. I should hear from him tomorrow. If not tonight, he does call me off hours sometimes. He the one pushing.

[lovemybugs10]

Could you co-sign for your mom? Would that make you legally responsible for payback?

*I have no clue if this would be doable, just trying to think outside the box*

[mkstlowe]

Could you co-sign for your mom? Would that make you legally responsible for payback?

*I have no clue if this would be doable, just trying to think outside the box*

Co-signer is responsible. When we did the truck i had to sign a slip that said I was 100% responsible as much as my husband. He main i was the co-signer.

I never thought of that. I will ask my attorney when he calls. Maybe or hopefully someone on this forum might already know this.

[justbroke]

To make it clean and not objectionable by the Trustee, not that they would, I would make sure you're or you and your co-debtor spouse are 100% responsible.

I now understand what your attorney is attempting to do. He's trying to make sure that prior to confirmation, you already have money and a car in the confirmed plan. Just make sure your parent(s) properly record the transaction by noting the lien on the title as well as creating an executing a promissory note with a "security interest" duly noted.

[mkstlowe]

To make it clean and not objectionable by the Trustee, not that they would, I would make sure you're or you and your co-debtor spouse are 100% responsible.

I now understand what your attorney is attempting to do. He's trying to make sure that prior to confirmation, you already have money and a car in the confirmed plan. Just make sure your parent(s) properly record the transaction by noting the lien on the title as well as creating an executing a promissory note with a "security interest" duly noted.

We not sure what we are doing. My mother has worked in Law for years so she will get the write stuff written up. I wish I could just find someone that would finance me and be done with it. That would really be living on a prayer.

My attorney is good, and its all his firm does. So I"m going to see what he thinks is best now.

Thanks everyone for taking time to respond!

[GatorDan]

I'm so glad I found this thread as I was about to start this very same topic. I am filed, but next week is the 341. I have a lease that expires Sept. 1 that my father is going to buy out. I found legal documents online and forms to file the lien with the state of Florida. I am having a hard time getting any assistance from my attorney. They just keep saying it "needs to be done right" but they haven't been very responsive. They originally told me that I cannot have my family buy a new car and me make payments as the title would be in the finance company's name. If the lease is bought outright in cash, then the title can be in my Father's name with the contract and lien made out to me.

I am really unhappy with the service I am getting from my attorney, but I am at a place where things are happening fast and I don't have the ability or money to find another.

Any advice on the car situation would be helpful since the only approval I can get is RoadLoans and they are unbelievable.

Thanks folks!

[justbroke]

If you offer to pay your attorney, they'll help you. Most debtors that file through an attorney don't understand what their fee agreement for services provides. It certainly does not provide assistance with filing liens and recording transactions in the UCC/registered transaction system. It's like asking your BK attorney to help you buy and finance a car... not in his job description or what you agreed would be the services provided.

If your attorney wants to do it on an hourly basis, just pay him his fee. Generally, though, most BK attorneys will probably not want to be involved in any secured debt purchases from a transactional standpoint.

[mkstlowe]

I just spoke with my attorney. He said if i can get someone to refinance but record a lien on the car, and then draw up paperwork on the promise to repay XXX dollars per month for XX years.

Or take a loan out on my 401k pay off my vehicle, and claim the loan payment on my expenses and get only $250 credit on the truck.

so i have alot to think about right now. I also like to state this information is given to me from my attorney, that works in the state/district i'm filing in. This does not mean all districts or trustee would approve this.

I suggest you always review with your attorney.

[justbroke]

Yes, definitely your attorney and case specifically. No Chapter 7 person should ever do this before filing as the vehicle will be unencumbered and be subject to sale. Worse, for the Chapter 7 person, the 401(k) loan repayment won't be an allowed deduction.

Always consult your attorney for your specific case. In this specific case, while it makes my skin crawl, taking a loan from your 401(k) in this particular situation, may be good.