Can We Qualify for Ch 7?

[PixieDust]

Thanks so much for all your help and advice! Actually, the car isn't the only reason. Without it, we're still about $7k in debt. I know it dosen't seem like much, but when your income is only about $28k a year, it's alot. The thing about trading the car in on another one is that we can't afford any new monthly payments either. When you take the xtra car payment and the xtra insurance off our monthly expenses, we still don't really have any disposable income - about $50. This does not include paying for preschol for our son (which we will need to do soon) or any recreation/entertainment (not even $5 to rent a movie), much less should anything emergencies occur. Hopefully, once I start back to work, the situation will improve some. This is also our reason for not filing ch13 - we just can't afford the payments. With almost no disposable income, it's going to be kind of impossible to meet our monthly bills AND catch up on what we owe. Trust me, I've been trying to do it for months! As for the bk ruining our credit - well it's pretty much ruined anyway. We've had so many late payments and non payments that it's just a mess. BK can't make it much worse.

[Whittio]

$7k in debt after the car is taken care of? Gosh, I just don't know if that's worth it?? I wish others would post about this. It seems there should be another way. Why can you just let them repo the car? I don't know what that is, but just give it back?? Certainly you can whittle away at $7k??

[Lightning]

Do not file bankruptcy over $7,000. Yes, it's a lot of money, but I highly doubt there aren't places you can cut in your budget to pay that off. I also seriously doubt that a trustee would grant you a Chapter 7 with so little debt. You may be earning below the median, but you're not in poverty.

If you can bring in $350 if you work (minus daycare expenses), that means your monthly income would increase by over 10%. Definitely worth it. You can put that entire $350 toward your debt.

Frankly, I find it a bit appalling that you'd spend $9,000 on moving but won't find the money to pay off $7,000 of debt. Your priorities seem a bit off, and filing bankruptcy won't resolve that.

[Whittio]

I don't think moving expenses were "out of line".. perhaps they spent that money so that they could have better quality of life in a cheaper area? We're trying to sell our house in CA to move to TN, and if I owed money, I would still do it. The cost of living is just FAR cheaper there, it's worth it to spend the money to GET there.

As far as filing on $7000.. I wouldn't do it. Find something else to do with that car. Can't anyone comment on repos? What happens if she just doesn't pay the payment? Or calls the finance company and tells them she doesn't want it, come get it? What happens then?? I mean, it's a secured loan, if she doesn't want the item, she gives it back right? Then is the debt erased??

[Minnymouth]

If the car is returned, she will be responsible for the "difference" of what is owed minus what the car sells for.......
If she's smart, she'll make them produce a bill of sale showing what the car sells for - many times they sell it for more than is owed on it....so make them prove what they got out of it....

Yeh, $7,000 is not "bankruptcy" stuff....... just apply excess cash till its paid off.....

Minny

[Whittio]

Minny, so if you're "upside down" on your car, say you bought it for $20k, and you owe $15k, but it's only worth $13k, then you pay the $2k? But only if they sell it for $13, if they sell it for $14, then you only owe the $1k?

I still think that is a good way to go?? With only $7k in cc debt? Otherwise, they will take the cars, and that debt will be discharged too right? So unless there is substantial 'upside downness' in the cars, it might not be worth it?

Very interesting.. I hadn't known any thing about that. Good to know!

[wannabedebtfree]

From past experience, the repossessions usually sell for way less than what is owed. They might sell the vehicle you only owe $15000 on for $8000 and then you'd have to pay the $7000 difference. I believe, they are usually sold at auctions to high bidder. My ex and I had purchased a travel trailer several years ago, we divorced and after that it was repossessed. He ended up owing close to $20000 on it after they sold it at an auction. This is just my experience. T

[hhou812hh]

From past experience, the repossessions usually sell for way less than what is owed. They might sell the vehicle you only owe $15000 on for $8000 and then you'd have to pay the $7000 difference. I believe, they are usually sold at auctions to high bidder. My ex and I had purchased a travel trailer several years ago, we divorced and after that it was repossessed. He ended up owing close to $20000 on it after they sold it at an auction. This is just my experience. T

You're very right! I don't think most people realize, but most of our car loans are very upside down. I looked for cars last October and they offered me $6500 and I owed $12000. I Traded it in 2 months ago and got $3500 for it and owed $10000. I had to argue over the 3500, they only offered me 3000. The salesman (and he's correct) said that due to all these discounts there's a flood of used cars out there and of course they are all deprciating very rapidly. Most auctions will get way below kbb.

[Teri]

Our van was recently repossesed - we owed 29K on it still - they sold it for $4000 - yes, you read that right - $4000 - and they want us to pay the 25K--they did come back and offer us FMV payoff of $16K - got an idea why we have to file bankruptcy?

[Whittio]

WOW, I had no clue that's how the repossessions worked. I guess if the buyer wasn't responsible for the depreciation, everyone would buy cars and let them be repossessed?? :s

Selling used cars these days is very hard. I find most people want NEW, and as mentioned before, with the deals that are out there, why shouldn't people buy new?

On the flip side, that also means that you can BUY used cars very cheap. My grandma just passed away on July 29th, and she had a 1995 Buick, my dad has been trying to sell it since she passed away. I told him, "good luck". I tried to get him to give the stupid car to my mom (they are divorced) because at the most, he'll be able to get $1500 out of it. Why let it sit there and pay insurance of $65 a month on the stupid thing, just get rid of it! For goodness sake, he stands to gain $300k from the sell of my grandmas house, what good would selling the car do him? Cheapskate!

So I guess if you are upside down in your car loan, and can't do anything about it, then with the $7k cc debt, looks like BK might be the right move??

[hhou812hh]

Our van was recently repossesed - we owed 29K on it still - they sold it for $4000 - yes, you read that right - $4000 - and they want us to pay the 25K--they did come back and offer us FMV payoff of $16K - got an idea why we have to file bankruptcy?

I just today heard on some business news that GM is lowering next years prices. All the car companies are going to do the same. There is just too much of a bubble with it. These cars and trucks are selling for 30k +, they don't last as long as they used to, there is a flood of used cars on the market. Almost everyone I know has a car upside down even with large down payments. These cars are just too inflated. Up until the 1990's my father kept every car he owned for 10 years sometimes 12. There is no way anyone can do that anymore unless you are a good mechanic or have $$ to burn to keep putting into it.

[Whittio]

Cars will go 10 years.. I agree that the cars of yester-year didn't need as much maintaince as the new cars do (also didn't have all the nice stuff they do now!), but my moms car is 13 years old, still running (although she needs a few minor adjustments) but my father has my grandma's Buick and it's 10 years old. I think more of the problem is, we are a society of instant gratification, and we want newer/bigger/better and we want it NOW! And with the loans available, we CAN have it now, but "pay later". and Yep.. you sure do pay later.

My mom was just watching the T.V. a few weeks ago, saw an ad for a car, "ONLY $150 a month" .. well sheesh, they are begging us to take their credit! Then they get mad when we can't pay for everything that they have tempted us with.

We used to always work for what we had and saved to buy it! no more.. we're able to live way out of our means, and that makes problems.

I was going to transfer all my debt to one credit card. I had $10k on it already, and needed another $5, I requested the increase, and got a letter a week or so later saying due to my debt, they couldn't increase my limit.. WELL, in checking with my card online, I see they raised my limit $8700!! Just begging for me to spend more then I can afford! If they see that I owe a lot, and our income can't "afford it".. why on earth are they giving it away??

[hhou812hh]

Cars will go 10 years.. I agree that the cars of yester-year didn't need as much maintaince as the new cars do (also didn't have all the nice stuff they do now!), but my moms car is 13 years old, still running (although she needs a few minor adjustments) but my father has my grandma's Buick and it's 10 years old. I think more of the problem is, we are a society of instant gratification, and we want newer/bigger/better and we want it NOW! And with the loans available, we CAN have it now, but "pay later". and Yep.. you sure do pay later.

My mom was just watching the T.V. a few weeks ago, saw an ad for a car, "ONLY $150 a month" .. well sheesh, they are begging us to take their credit! Then they get mad when we can't pay for everything that they have tempted us with.

We used to always work for what we had and saved to buy it! no more.. we're able to live way out of our means, and that makes problems.

I was going to transfer all my debt to one credit card. I had $10k on it already, and needed another $5, I requested the increase, and got a letter a week or so later saying due to my debt, they couldn't increase my limit.. WELL, in checking with my card online, I see they raised my limit $8700!! Just begging for me to spend more then I can afford! If they see that I owe a lot, and our income can't "afford it".. why on earth are they giving it away??

I don't know. Lightning may have the answer. He seems simpathetic to this for some reason. I don't blame banks for all of us falling on hard times, but they sure aren't doing very much to help their cause. I can't afford to pay back what I owe today ($63k) and 3 different banks raised my limits by almost 10k and constantly send me convenience checks. Just don't understand them. In about 30 days it will stop since I am filing right about then.

I tell you. If for one day I was a bk judge and any bank disputed anything I would rule in favor of the debtor just because of this nonsence.

[hhou812hh]

Cars will go 10 years.. I agree that the cars of yester-year didn't need as much maintaince as the new cars do (also didn't have all the nice stuff they do now!), but my moms car is 13 years old, still running (although she needs a few minor adjustments) but my father has my grandma's Buick and it's 10 years old. I think more of the problem is, we are a society of instant gratification, and we want newer/bigger/better and we want it NOW! And with the loans available, we CAN have it now, but "pay later". and Yep.. you sure do pay later.

My mom was just watching the T.V. a few weeks ago, saw an ad for a car, "ONLY $150 a month" .. well sheesh, they are begging us to take their credit! Then they get mad when we can't pay for everything that they have tempted us with.

We used to always work for what we had and saved to buy it! no more.. we're able to live way out of our means, and that makes problems.

I was going to transfer all my debt to one credit card. I had $10k on it already, and needed another $5, I requested the increase, and got a letter a week or so later saying due to my debt, they couldn't increase my limit.. WELL, in checking with my card online, I see they raised my limit $8700!! Just begging for me to spend more then I can afford! If they see that I owe a lot, and our income can't "afford it".. why on earth are they giving it away??

I know most of our generation is spoiled. I'm my fathers son when it comes to cars and try to keep them for as long as possible( can't help it, the man brainwashed me growing up. LOL) , ,but I can't do it. The repairs are very expensive and it's difficult to keep up with. As soon as they hit 100k miles forget it! Some of them just become money pits and it's all over. I hate that call from the mechanic when he tells me the cost is over $1000 for the dumbest of things.

[StaciMM]

Regarding Repos

We bought a used car in 1999. We should have put more time into it, had it checked out, etc. Turns out it had a cracked head. As we bought it 'as is' it didn't matter. They took the car back, then got a judgement for $3205 against my husband in 2000. Now, that account has grown with interest up to $9255, and they've started garnishing my husband's check.

That account is a large part of the reason we are filing. (He has some other old accounts, I have some small things, plus medical, etc. so total we are filing on is $37000 or so.) We can handle all of our monthly payments, vehicles, rent, etc. are current. We just can't afford to do anything about the old stuff. Between the 2 of us, we're each working 2 jobs and would like to someday own a house.