Forced into chap 13 because of car???

[B12]

GF of mine is also filing BK. She met with first attorney today. Last year she did a refi on her house and the lender made her pay her car off to qualify for the cash out loan.

Of course, now she can't afford the 2500 a month mortgage and her car has no lien, so she is filing BK and foreclosing. Talk about turning an exemption into an asset!

This lawyer today told her she needs to file chap 13 because of the value in the car which is around 8000. Our FL exemption if not using homestead is only 4000. She otherwise qualifies for a chapter 7.

I had no advice for her but made her make an appointment with my lawyer for another opinion.

Any advice?

[HHM]

She doesn't "have" to file a chapter 13 because of the car (assuming she otherwise qualifies for a chapter 7)....but she would need to pay the chapter 7 trustee the non-exempt value of car.

[B12]

Thanks.

Does it have to be in one lump sum or can she make payments?

[rrockinggramma]

perhaps she should take out a loan for 4000 on the vehicle and use the monies for necessities before she files for the chapter 7. Have her keep receipts. No luxury purchases etc.

[B12]

I thought of that but didn't want to advise her until she talks to another lawyer.

Can that be done and if so, does she have to wait 70 days again.

She can surely find valid use for 4000.

Another thought, can she sell this car and buy a used car for less and use the money on necessities?

She has an hour commute to work so she would need something stable.

[keepmine]

Another thought, can she sell this car and buy a used car for less and use the money on necessities?

She has an hour commute to work so she would need something stable.

That would be my suggestion. I'd not file a 13 just to hang on to a car that will depreciate every year.