Will Husband be able to Keep Motorcycle in CH 13?

[MarieT]

Okay... I have asked out attorney this but does not sound right. He said that because we don't have equity in the motorcycle - owe more than it's worth right now - that we can keep it. The leinholder for bike did request proof of insurance and current mileage through our attorney which I sent.

My husband says that he thinks that the trustee would require us to turn it back to the lien holder so that payment amount (about $250) could go to the trustee.

[BKAttyMI]

A motorcycle is a "luxury item", unless it is your primary means of transportation. Generally, you are not allowed to continue making payments on luxury items in a 13 unless you are already paying back 100% in your plan.

[MarieT]

Well, that's a bummer. It is not his primary means of transportation but he does use it for his 26 mile drive to work when weather permits to save gas. I think I will send an email to our attorney and ask the question more directly. Thanks!

[HHM]

Yep, trustee will have a hard time allowing the payment. So, just be prepared.

Now, generally, what happens here is that you get a friend a family member to say they will keep making payments...and then you just pad the budget in certain areas and assuming YOU have the discipline to save, you can make it so you have the ability to keep making payments, but generally, the trustee and court will not allow the motorcycle payment as a line item expense.

[BNKRPTinNC]

Let me throw in a "depends". We had an RV that was 5 years old, at the time of filing, and an obvious luxury item as it was definitely not necessary for our survival. More than willing to give it up but was crammed down to $8K from $12K and included in our plan. We are at a 14% payback BTW. I guess the depends part on this would be the value of the bike and if it is something that will easily convert to cash by a sale. Don't give up on it as you never know.

[HHM]

A lot really depends on your chapter 13 means test (B-22C), if you can cram, and still pay what b-22 says your unsecured creditors should get, you have a shot, but most BK judges in CO are anti motorcycle, so just FYI.

[MarieT]

Talked to my attorney this afternoon and he said ithe motorcycle absolutely would not be a problem since we owe money on it??!!

It would not easily convert to cash as we owe more than we could sell it for and what in the heck does it mean to cram it down? It is almost 5 years old and a basic model without all the bells and whistles. I don't think the unsecured creditors are getting much but my attorney worked it all out and said it's okay.

[AKB]

We just got informed by trustee that we can keep a 4 wheeler if we pay a extra amount of 200.00 a month in our plan. Not sure what we are going to do yet. We use it on the farm but they still considered it a luxury.

[MarieT]

Do you still owe money on the 4 wheeler? My attorney was pretty adament that the motorcycle would not pose a problem since we still owe money on it and no equity in it. I think if they asked us to come up with an additional $200 or more, we would just give it back to the lien holder as that would be paying another $12,000 for the bike at $200/month for 60 months and it did not cost that much new!

[MarieT]

Yep, trustee will have a hard time allowing the payment. So, just be prepared.

Now, generally, what happens here is that you get a friend a family member to say they will keep making payments...and then you just pad the budget in certain areas and assuming YOU have the discipline to save, you can make it so you have the ability to keep making payments, but generally, the trustee and court will not allow the motorcycle payment as a line item expense.

Just wondering on this idea, would they require to see something in writing from the family member? I am asking because we are hoping that none of our family ever finds out that we filed BK. None of our family live in Colorado and we do not have any frinds we would be comfortable asking either.

[AKB]

Yes we still owe on it and our attorney never even mentioned it would be a problem so we were suprised when we got a letter from trustee. We have no equity in it I don't know how much its worth but we only had it about a year. The amount we owe is like 12000 so the 200.00 a month is to cover that amount that would go to unsecured if we wasn't paying the 4 wheeler payment.

[MarieT]

Yes we still owe on it and our attorney never even mentioned it would be a problem so we were suprised when we got a letter from trustee. We have no equity in it I don't know how much its worth but we only had it about a year. The amount we owe is like 12000 so the 200.00 a month is to cover that amount that would go to unsecured if we wasn't paying the 4 wheeler payment.

Ok that makes more sense then...no matter what, we're either going to be making the motorcycle payment or if we have the lien-holder take it back, the payment mount will be added into the BK plan to go to unsecured creditors. So it's kind of like you are really only paying the $200 a month.

[walkthaplank]

MarieT, a lot of this stuff is district (even trustee) specific. If your lawyer tells you that this won't be a problem, he/she is probably right. If not, the attorney gets to amend the plan. Listen to your lawyer, that is why you are paying him/her.

[MarieT]

MarieT, a lot of this stuff is district (even trustee) specific. If your lawyer tells you that this won't be a problem, he/she is probably right. If not, the attorney gets to amend the plan. Listen to your lawyer, that is why you are paying him/her.

Yes, you are right. I paid to have an attorney but I guess I have used attorneys in the past that screwed up so I am second-guessing here. (Never had a BK attorney before). My attorney has been great about getting back to me on the same day when I email a question and I like that I have the answer in writing so I can reference it later if I need to. I think I am getting antsy because the 341 hearing is next week. My attorney sid the trustee will probably ask for more info because they always do so I'm nervous about that too. It looks like they only have one Ch 13 trustee in Colorado so I don't see how she can do all the Ch 13 BK cases...she must be a super busy lady! My attorney really seems competant so I hope I am right!

[catleg]

This website PDF file shows the official guidelines that chapter 13 trustees nationwide are supposed to go by, in evaluating a B22C form.

It says that secured debt deductions are not disallowed for luxury items, but may give rise to a bad faith objection.
So there you have it. Make a case that it's not a luxury and you're not in bad faith. After all, you're essentially
doing loss mitigation for the secured creditor.