How to time this out?

[applecake]

My brain hurts. I know I should just ask the attorney. But here goes...

We are planning on filing ch 7 in January. We are going to surrender our upside-down car in it. Our plan was to buy a used car shortly after the discharge with our tax refund. But now I am reading that you can only keep a certain amount of that refund and the rest has to go to the trustee? I'm kinda confused about the tax refund thing.

Should we wait till we get our refund, buy a car with it, and then file? I'm worried about this too, because the federal exemption for a car is only $2775. I can't figure out what it is for PA. But we're planning on about $5000 for this car.

I just don't want to surrender our car, only for them to take the money we were going to use to buy a new one, and then be stuck without a car.

If anyone has a good website for PA exemptions, that would be helpful too. Thanks!

applecake

[justbroke]

Pennsylvania exemptions http://www.bankruptcyinformation.com/PA_exemp.htm.

In Pa., you use the Federal Exemptions for your car ($2,275). However, if you aren't using the homestead exemption, you have like another $8,725 to use as a wild card.

As for your refund, it depends on your State. I don't know how Pa. deals with these, and if they are exempt as they are in some other States.

Looks like you're in a tough spot for sure. Strategy will dictate that you want to exempt as much as possible so that you're a No Asset Chapter 7. If you don't have the house (homestead), that additional $8,725 could be used to cover the car, but it needs to help cover other "generic" items.

[TEW]

here you go

http://www.pennsylvania-bankruptcy.com/exemptions.html

[TEW]

Pennsylvania exemptions http://www.bankruptcyinformation.com/PA_exemp.htm.

In Pa., you use the Federal Exemptions for your car ($2,275). However, if you aren't using the homestead exemption, you have like another $8,725 to use as a wild card.

As for your refund, it depends on your State. I don't know how Pa. deals with these, and if they are exempt as they are in some other States.

Looks like you're in a tough spot for sure. Strategy will dictate that you want to exempt as much as possible so that you're a No Asset Chapter 7. If you don't have the house (homestead), that additional $8,725 could be used to cover the car, but it needs to help cover other "generic" items.

you'er just to quick broke

[ready2puke]

Is it possible for you to buy the car now? Not sure if you would beable to get a car loan... And maybe reaffirm it in your 7? That way you dont have to worry about the exemption

[applecake]

Well, the idea is to eliminate that car payment altogether. But even if we wanted to finance one now, I think our credit is so trashed that we probably couldn't anyway. Our debt-to-income is absurd right now!

I forgot about that $8K-something for the wild card. I think that should make us OK - we only have $5-$6K equity in our house...it'll be close but I think we can make it work. I'll have to figure out the exact numbers. Plus, I don't really know what our refund is going to be, but considering we made next to NOTHING this year, it should be pretty high I'm thinking.

Luckily we have some time to figure this stuff out. But I hate the "hurry up and wait" period.

[mmenz22779]

apple it sounds funny I know but if you are going to file BK it is better to have a car payment. even if you take out a loan at a high intrest rate you are better because the car will have no equity in it and you dont have to worry. Paying cash for a car before B/K is not a good idea as that is now equity you have to protect.

Kinda backwards yes i know but getting a loan is your best bet if you want to protect that car.

Prebankrupcy planning is so important.

JMHO though

[mmenz22779]

as for the money use it for normal living expenses, get tires for that car ect...

or you can use part of your exemption to protect some of that cash.

[ready2puke]

Yep thats what I was getting at also

apple it sounds funny I know but if you are going to file BK it is better to have a car payment. even if you take out a loan at a high intrest rate you are better because the car will have no equity in it and you dont have to worry. Paying cash for a car before B/K is not a good idea as that is now equity you have to protect.

Kinda backwards yes i know but getting a loan is your best bet if you want to protect that car.

Prebankrupcy planning is so important.

JMHO though

Its a game at this point that you have to play in your favor. I also have a car that is paid off. I love this car and am afraid to get another since this is the one I trust. I would have to use some of my exemptions that I really dont want to use. Thinking about getting a lien on it to save it..

[albacore44]

Well, the idea is to eliminate that car payment altogether. But even if we wanted to finance one now, I think our credit is so trashed that we probably couldn't anyway. Our debt-to-income is absurd right now!

I forgot about that $8K-something for the wild card. I think that should make us OK - we only have $5-$6K equity in our house...it'll be close but I think we can make it work. I'll have to figure out the exact numbers. Plus, I don't really know what our refund is going to be, but considering we made next to NOTHING this year, it should be pretty high I'm thinking.

Luckily we have some time to figure this stuff out. But I hate the "hurry up and wait" period.

Just bought a car on reccomendation from an attorney. not late to any CC yet but high debt to income ratio dropped my credit score to 592 FI. GMAC won't touch anything under 700 right now , but was able to get Chase at 9.9%. boy will they be ticked off when I file in 7-8 months and charge off the $25K in CC debt.

[mmenz22779]

44 did you open that account up 7-8 months ago and the balace is 25k now?

[ready2puke]

I think he said he just opened it up and will file in

7-8 months. Be careful could look like fraud since you knew you were filing when you did it....

[mmenz22779]

if he makes the payments for 7 months would that look ok?

[albacore44]

44 did you open that account up 7-8 months ago and the balace is 25k now?

No. have had these cards for several years. used to pay them off every month. been doing balance transfers between 4 or so banks for about 2 years now. I have enough cash to pay everyone for about 6 months . Then i will have to stop, wait and see what happens. It is not unethical to pre-plan and get your ducks in order in advance when you know your going down the drain. besides...........who knows ?? new president might just change the laws to help us. the way i see it time is on our side