I Should Do WHAT?

[Walnut]

I mentioned to my attorney that I am not interested in Ch 13 since I don't want all the hassle to buy a new car in a year or so. He suggested we buy a new car before filing (I make $73000/yr) to make it easier as it would raise our means test figures. I'm like - Excuse me? Who would loan me money with chargeoffs? He said my income should suffice. Argh.. I am filing on the 29th and am not sure what to do. Is buying a car after a 7 that difficult?

[HHM]

If you already have crappy credit, the deal you get after a chapter 7, would probably be about the same you would get now, before the chapter 7.

Incidentally, why the need for a new car?

[Walnut]

The main thing about a new car (although I'd probably get something certified preowned) is because of our expanding family. Right now the car I am considering trading in is about $4500 upside down - $3000 on prinicpal and $1500 in late fees/etc. We could also let it go in the BK and buy one I suppose. Is it worth paying the extra money over 26 months remaining, or should be let the bank come get it? How hard is it to get a car after ch 7?

[brainless twit]

I can only speak from personal experience, Walnut. My husband and I decided to surrender our only vehicle in our BK7. A few weeks after we filed our petition, the credit union wanted us to turn in the car, so we had to get moving to find another one. Our attorney told us it was fine to purchase (we were worried since we hadn't even been to court yet), so we called around to a few dealerships and explained our situation. We purchased a 2006 Pontiac G6 with 21,000 miles with 11% interest. Not great, but since our credit was already pretty horrible, I was glad to get it.

Now that we're discharged, we get at least 2 offers for auto financing every day. The interests range from 15-25% but somehow I don't think you would have any trouble getting approved. Still, if you can purchase a car now, before the BK is on your credit report, you'd probably get a better deal as far as financing is concerned.

I recently got a job 50 miles from home and we had to purchase another car. I contacted Tidewater Motor Credit - they were willing to give me a loan even though our BK was active at the time. My interest rate sucks, but there was no other option; we HAD to buy a car. It's surprising how many lenders are BK-friendly.

[moneytree]

just a car idea...

Check into Saturns. We got 0% financing not long before we decided to file. I believe they have one of the best interest rate/deals for customers and their cars are solid. The VUE's (like ours) have Honda engines. Big deal for me because I wanted a Honda CRV but didn't want to spend the extra $. The new Outlook is a 7 seater SUV! Just 8 mos. later we had already met with the atty. and we were just about ready to stop making payments on our few creditors when it was apparent that my 10 yr. old Honda Civic was upside down in car repairs, so with our tails between our legs we went out and bought a brand new Honda Civic. Best thing we could have done. We were shocked to get approved and I think it has 6.5% interest! I've heard of other stories where people buy new cars before filing. If you picture the next 10 yrs. of the 7 being on the credit report, then it's a wise move for your future and comfort. Plus, the warranties are helpful. Saturn now offers a 4-5 yr. warranty. We'll be getting an Outlook at some point. We are outgrowing our VUE. Resale values on VUEs are great too. The local Saturn dealer was going to offer me $6K cash back on a 2006 Saturn mini-van. Great deal, but we were in the middle of filing.

[Walnut]

I am thiking of getting a preowned Mercedes-Benz S500 (like around a 2002 or 2003) which usually can be found for about $27000 here in San Antonio. I just don't know about going into a dealership (I have no money to put down since I have to pay my attorney) and try to trade in an upside-down Mitsubishi Lancer (see above) on a new car with my credit looking like a war zone. Saturn though makes a Sky that I wouldn't mind owning but it is not a family car.

Yes, a Mercedes is a luxury car but it's not like I'm going out buying a brand new S500 for $75,000. My raise is expected to take me to $75000 per year and my wife will return to work once the BK is over hoping to pull in $150-200 per week.

[lrprn]

I am thiking of getting a preowned Mercedes-Benz S500 (like around a 2002 or 2003) which usually can be found for about $27000 here in San Antonio. ... Yes, a Mercedes is a luxury car but it's not like I'm going out buying a brand new S500 for $75,000. My raise is expected to take me to $75000 per year and my wife will return to work once the BK is over hoping to pull in $150-200 per week.

Time for a serious dose of reality here, Walnut. If you buy a Mercedes within six months of filing, used or not, you might as well wave a red flag in front of the trustee saying "Look really closely at my case!" .

You are filing bankruptcy - bankrupt people do not buy Mercedes. Get over the idea that you have to impress the people in your life, find a great Honda or other reliable used car that fits your expanding family needs. If your financial situation is shaky enough now that you are filing bankruptcy, the last thing you need to do is saddle your family with more debt than you really have to at this point for an asset that is going to decrease in value as quickly as a car does - even a Mercedes.

[Walnut]

That's a great point - it's one thing to own a Mercedes all along, and another to buy one just shy of BK. My wife and I just discussed this and decided to keep both vehicles we have - double up on payments if we cut back on expenses, or if she returns to work - pay one car off, then double up on the other one and get it also paid off. I don't like the idea of taking on more debt just to firm up our Ch 7 case. Seems counterproductive.

I don't see how my attorney could have even come up with this idea in the first place.

[HHM]

I am thiking of getting a preowned Mercedes-Benz S500 (like around a 2002 or 2003) which usually can be found for about $27000 here in San Antonio. I just don't know about going into a dealership (I have no money to put down since I have to pay my attorney) and try to trade in an upside-down Mitsubishi Lancer (see above) on a new car with my credit looking like a war zone. Saturn though makes a Sky that I wouldn't mind owning but it is not a family car.

Yes, a Mercedes is a luxury car but it's not like I'm going out buying a brand new S500 for $75,000. My raise is expected to take me to $75000 per year and my wife will return to work once the BK is over hoping to pull in $150-200 per week.

No offense, but if that is your decision making method, no wonder you are going bankrupt.

[Walnut]

HHM: This all came from my attorney - not from me. He suggested to buy a car before filing with a payment of over $471, and perhaps another for over $399. Hence the original question. So - that puts me into a car upwards of $30,000. Yes, I completely agree - it is silly almost beyond comprehension. These new BK laws are a friggin joke. I think it has to do with the means test, since both our cars ar about 26-32 months out from payoff, they take the total and divide it into 60 which cuts the payments (currently $433 and $395) down to less than half. Then you go with the IRS guidelines at that point.

All that being said - he did seem confident either way that he could swing a 7 for us. Will know more on the 29th when we crunch the numbers. We just had a baby in November - so it boosted expenses.

What caused our situation? In 2004, I lost my job of 12 years - looked for six months and was left no choice but to take a job 1500 miles away. Consequently, wife lost her job, and after the move she worked part time until the baby arrived, and now is a homemaker. During all this, we were steadily falling behind - sold our house up north short by $50,000 - and then suddenly all our interest rates hit numbers as high as 32%, overlimit and late fees every month of $35 each, and then minimum payments doubled. Next thing you know - we get demands of huge sums to get us out of collection. So - here we sit. We have about $80K in total debts. Of that, about $55K in unsecured.

[NissanMan]

I dont know what anyone else is thinking but it seems like you live above what you make per year. 75,000 a year is a lot of money for one person to make and if your wife is working as well I would imagine your total income is 100,000 or more a year. I could easily live off of that amount with a family.

After you get done with your bankruptcy you may want to reevaluate your lifestyle and spending habits.

[BK'd-Betty]

Didn't the new BK laws put a "gag order" on attorney's giving client's "financial" advice pre-BK?

If I recall, didn't the new law specifically address BK Lawyer's giving their client's advice to take on new or additional debt on the eve of BK?

[HHM]

Didn't the new BK laws put a "gag order" on attorney's giving client's "financial" advice pre-BK?

If I recall, didn't the new law specifically address BK Lawyer's giving their client's advice to take on new or additional debt on the eve of BK?

It does, but I think the prevailing thought on that is that provision is a violation of free speech and probably unconstitutional, so no one really enforces it. (although, I don't know if any cases have come down on that issue yet, because no one has made an issue of it).

[BK'd-Betty]

Now that you mention it HHM, I do recall what you said below! Thanks for answering that

It does, but I think the prevailing thought on that is that provision is a violation of free speech and probably unconstitutional, so no one really enforces it. (although, I don't know if any cases have come down on that issue yet, because no one has made an issue of it).

[Walnut]

I dont know what anyone else is thinking but it seems like you live above what you make per year. 75,000 a year is a lot of money for one person to make and if your wife is working as well I would imagine your total income is 100,000 or more a year. I could easily live off of that amount with a family.

After you get done with your bankruptcy you may want to reevaluate your lifestyle and spending habits.

I ws hoping the online debtor education would be useful - the online credit counseling was pretty much useless. We do want to do that though and will be looking for a financial advisor as soon as we get past all this. I am calling the whole process more of a financial reorganization. We got into a lot of bad habits when my last job seemed to be stable enough for a lifetime, only to find out how hard reality can hit you.


As to our lawyer giving us advice - I'm not sure much about how that pertains to the law, but isn't that kind of the point? I want advice, not just a guy to take my petition and do basically nothing. If BK is not the best option for us, I need to know about it before I dump more money into atty fees and filing fees. I guess the attorneys feel pretty hamstrung if that is the case.