Car Question

[Fade2Blue]

We met with a lawyer and it looks like we'll probably file chapter 13. I am concerned that our cars are old. We have 3 which we owe nothing on, but altogether they only add up to about $7500 on Kelly Blue Book private party. We have daughters in college and highschool who use one of them. The oldest one, which my husband uses, will only hold up another year, probably. It's a 1996 Toyota with 350,000 miles. The lawyer said after we file Ch 13 we can later then file a motion to incur debt when it goes. My question is how everyone has handled cars? I read that you should have good cars going into this. Has anyone had to get another car part way through BK? If so, do the payments come out of the plan so that less goes to unsecured debt?

[newbie2]

You can petition to take on added debt during your plan (a car loan) but frankly it is much easier to do it before you file. Trustees don't like seeing less than what was originally proposed going to the unsecured creditors. If at all possible look in to replacing at least one of the cars before you file. This way your plan is accurate (your disposable monthly income) from the start with the new car payment in your allowed budget. Good luck to you.

[needanswers]

If I were in your situation, I would get a new car. The process of trying to do that during plan would just be too much of a hassle and your interest rate would likely be sky high.

[Floridagail]

definately get a new car before embarking on 5 yrs Chptr 13, with maybe a dependable car.

[Nicollette]

I was approved to incur debt during my plan. I had to surrender the vehicle that was included in my plan. My attorney knew I was wanting to incur the debt so he had me go out and pick out a car with reasonable mileage and not very costly. I did just that, had the dealer write up an invoice so my attorney could submit it to the trustee. Once I got the approval from the BK court, I was able to finance an 06 Hyundai Sonata.

[lrprn]

Agree that the best option is to get at least one reliable car that can get you through your plan years BEFORE filing. It's actually difficult to get financing at all during an active Ch 13, and as already said, the interest rates are horrible - mid to upper teens at best. Go out car shopping now and find out what you can get before filing.

[ABC]

What about just paying cash for a used car if possible ? Your driving 14 year old cars. It would seem you could get a decent 5 or 6 year old reliable car.

[Fade2Blue]

Thanks for the responses. The other two cars should make it as we don't put a lot of miles on them. My commute is only 2 miles. My husbands car gets very heavy use. If we buy a new car, maybe a Honda Civic, how long should we wait before we file? Should I at least make 2 payments?

[enginegirl]

i purchased a car 2 months before filing... (purchased may 10, filed july 17, confirmation date 6 oct) the trustee had no issue with it.... I did however have a higher interest rate (7.3%). Remember that the more allowable expenses you have the less disposable income you have the less you payments will be....

on another note.... when you buy a new car try to get an extended warranty (5 year) that way everything will be covered with no extra surprise expenses!

[cspa522]

We just bought a car 2 weeks ago, with a loan from Roadloans. My attorney advised us to do this, as we were in the same situation you are (roughly). My car was 9 years old with 128,000 miles, leaked oil and antifreeze, and needed four new tires. It wasn't going to last us the 5 year plan. Per Missouri law we could purchase the car and then include it in the plan, as long as we've made one payment on it before we file. We are going to file in November, and will have made the first payment in October. Hopefully there are no objections.