How many car expenses can I claim?

[Slingerland]

My wife and I have three cars, all of which have payments. One for me, one for my wife, one for our son who is away at college. Arkansas being a rural state, there is no reliable public/mass transit and the trustees will allow us to keep the 3rd car.

Assume I were to file a solo C-13 without my wife. The trustees here will require that my C-13 plan include the payments for all three cars. No problem. But in the 22C do I claim the operating expenses for 1 car or 2? Obviously I cannot claim the expenses of operating my wife's car, but what about my son's car?

Thanks!

[catleg]

If you are a solo case you can claim 1 car operating expense and 1 car ownership expense (loan).
If you are a joint case you can claim 2 car operating expenses and 2 car ownership expenses (loans).
You can own extra cars as long as you meet the requirement to distribute to unsecured creditors greater value than they would receive in a chapter 7 liquidation.
If you have extra expenses you'll have to "make room" in your plan by padding other expenses.
In theory the US Trustee does not take a position on "toys" (e.g. watercraft) with loans.
A chapter 13 is supposed to protect secured creditors above all.
However, I think if you bought (say) 10 cars with loans in order to use up your disposable income you would get hit with a "bad faith" or "totality of circumstances" objection.
On the other hand if, let's say, you were running a taxi business or a landscaping business that might be ok.

[Slingerland]

Thanks, catleg! I was hoping I culd carry the operating expenses for my son's car... oh well...

[catleg]

I wouldn't say you absolutely can't, since it's another driver in the household.
Give it a try. The worst they can say is no. The more "grey" area things you toss in, the harder it is for them to figure out what your "real" number is. :-)

[Slingerland]

Hmmm... as you say it's another driver in the household... who is attending colelge in a city with NO public transport at all. If he wants to go to the doctor he has to drive... grocery store... etc. Like you say, the worst they can say is "no". And maybe in the process, miss something more subtle

Thanks again!

[AngelinaCat]

Is this car titled in your name or your son's? I assume you are making the payments on it. Is he paying you anything towards it?

If everything is in your name, don't start thinking of changing anything at this late date. If you do, you will have to wait at least 2 years, probably more before filing, as a transfer before you file could be viewed as an attempt to hide assets.

Good luck to you.

[8forme]

We were told by our attorney, one car per licensed driver in the household. We only have 2 cars but 3 drivers so not a point for us.

[justbroke]

So long as the obligation to pay the loan is in the name of a debtor (or debtor spouse) and is for the household, it should not be a problem. However, the Trustee or another creditor may "complain" that you're diverting funds that should otherwise go to the unsecured creditors.

As always, work with your attorney if you have one. If you don't have an attorney, are pro se, then you will need to research caselaw for your District and Circuit Court of Appeals. As catleg eluded to, Chapter 13s are special! You can actually keep any property so long as the creditors receive the "Chapter 7" liquidation of that property. This is very tricky when trying to get to the right number.

Personally, I would claim 2 cars and then let the Trustee object. The major part of a Chapter 13 is do rehabilitate the debtor through reorganization. So long as it is necessary for the reorganization of the debtor, the court would confirm a plan over the objection of the Trustee. In my Chapter 13, I claimed 2 cars. My wife was not a co-debtor, the expense for the second car was allowed, and there were no objections at all.

[Slingerland]

Thanks, everybody! To answer the questions:

The car is titled in my name and my wife's name, not my son's. No plans to transfer title or anything like that. The car is over 910 days old, BUT since my wife is not filing, I do not plan to attempt a cramdown on the value since Toyota would then go after my wife for the difference.

Definitely have an attorney in mind... been interviewing others, but I need somebody who also understands rental properties. Right now my stage is "final planning" before filing.

[justbroke]

The car is titled in my name and my wife's name, not my son's. No plans to transfer title or anything like that. The car is over 910 days old, BUT since my wife is not filing, I do not plan to attempt a cramdown on the value since Toyota would then go after my wife for the difference.

The co-debtor stay would protect your wife... unless they were able to get relief from the stay. Did you ask this during your consultation(s)?

[Slingerland]

The attorney strongly suggested that since my wife is not filing BK, under 11 USC 1301 I should make the unsecured part of the car a 100% payback. This should keep her "safe" and also minimize teh impact to her credit.

[justbroke]

Yes, 11 USC 1301 is the co-debtor stay. The only way to pay the secured creditor everything, you would need to NOT cram-down the car's value in your Chapter 13. In other words, you wouldn't bifurcate the car loan balance into a secured and unsecured portion. That way the creditor would get the balance paid over the life of the plan.

Now, is it worth it? That can only be answered by looking at what you would have saved and what recourse would the creditor have taken against the non-filing co-debtor.

[Slingerland]

In this case, the 3rd car is a 2009 Yaris. We've been paying on it almost three years, and the amount that is upside down is not enough to worry about. And if I hold off filing until August, the car may actually have a bit of equity to exempt!