7 months prior: get life ins, increase + auto ins, buy car

[Moneypenny]

yes thanks. i know i cant include these flights as expenses under filing. i was just describing my situation. actually i see what some people are saying now. flying for xmas does not seem right for bk case, and if taking family for research is also not right, it is a bigger problem because it is hard to abandond young children like that. I have not fully come around to grasping the situation yet (that is why i was seeking help on the board: many of you have thought through the situation already).

my income is about 6k a month, under the CA median for 4. the car payments about 480 actually once you figure in taxes and car alarm, etc.


as i look into the sched j more i see that i grossly underestimate lots of very basic necessities, which is a product of my total lack of knowledge of my own finances. there is a reason i am under water due to all my normal expenses. Yet I still wonder if I scrimped and saved for 5 years, at least part of that car loan would, without the car, be possible to put into a chapter 13 payment. I think when we are talking about sched j and new car loans, that is in the equation to some tiny or larger degree.

The way I morally justify it to myself is that our cars are breaking down and i need to get to work if i am to get this new start. But i am very disturbed and moved by peoples' comments and I appreciate it and will change my attitude toward all this. I do not want to do the wrong thing and feel bad about it the rest of my life.

Also to the more severe critics, when i said i was not interested in right or wrong only what works or doesnt, i meant that for the purposes of my forum questions i was not interested in right or wrong, not in my real life. i was just asking for the practical facts. since people volunteered the other information though, i actually appreciate that too.

thanks,

MMP

MMP

[jribe]

on the car amount -depends on your income; what's your yearly salary?

Also, going back to an earlier post where you mentioned flying family to the other coast and traveling abroad for work- the flights would not be an allowable expense.
The overseas would not count either; you could count the expenses for yourself only (if you list it on your taxe returns under the business section) but unfortunetly you cannnot include bringing the family.

Now- this does not mean you can't still bring your family with you. Just means you can't get to include those expenses in a hypothetical ch 7 or 13.

Thanks again. And sorry if I am abusing the forum by proposing all these possibilities that I might not do. I learned a lot and maybe others will too. And yes, as someone said, I am very afraid of anything going wrong and do not want to do the wrong thing because of that fear. I can also be afraid of doing wrong just on moral grounds at the same time: that is not a contradiction to me.

I really have a rational reason to have one reliable car pre-bk. whatever is left over can go to 13 or 7, but i need to know i can get to work. I think I might tolerate spinning the dice and not having life insurance, and I dont mind if that money goes into a 13 as a result. It would make me feel better about everything.

Do you think a new Honda Accord EX with payments 450 a month is unreasonable?

thanks!

MMP

[Moneypenny]

Thanks again. And sorry if I am abusing the forum by proposing all these possibilities that I might not do. I learned a lot and maybe others will too. And yes, as someone said, I am very afraid of anything going wrong and do not want to do the wrong thing because of that fear. I can also be afraid of doing wrong just on moral grounds at the same time: that is not a contradiction to me.

I really have a rational reason to have one reliable car pre-bk. whatever is left over can go to 13 or 7, but i need to know i can get to work. I think I might tolerate spinning the dice and not having life insurance, and I dont mind if that money goes into a 13 as a result. It would make me feel better about everything.

Do you think a new Honda Accord EX with payments 450 a month is unreasonable?

thanks!

MMP

[HHM]

I think you are horribly misunderstanding chapter 13. In a chapter 13, you are NOT required to pay the debt in full. You are only required to pay what you can afford to pay (income minus living expenses). At the end of the chapter 13, any remaining balance owed to your creditors is discharged (released).

In any event, you can put yourself in a position to have a successful BK by planning. You can buy a new car (within reason), you can up auto insurance coverage, life insurance etc. But, these are issues you really need to discuss with an attorney in your area to see how far you can take it.

[BkinTX]

I think you have a real confusion about wants v. needs.

You certainly haven't hit rock bottom yet.

[PoorGrammyinBK7]

Well, we also have 2 older cars with high mileage, still owe on them (doing ride-thru) and I really wish we could have had the luxury of doing a little pre-planning. We didn't.

I have seen posts on here where an attorney advised people to buy a new car - but I think that was for Ch 13. I also think there are some on here who have bought a car a month or so (maybe less) before a CH 7 as well. If you are able to wait a few months, a new or newer car might be a good idea if you plan to reaffirm it. But I'm not a lawyer.

I would ask if you have made sure you covered all expenses when you did the forms - even things that may not happen every month, like haircuts, dental visits, school supplies and clothing, car repairs, etc. That might also help if you have left out anything.

[frogger]

but i dont care if i am justified, just in what one can and cannot do. some things we can do that are, admittedly, not right or fair, while other things we are prohibited from doing even though they are right, reasonable, and fair.
MMP

Wow. Just remember that Karma can be a real *****.......

I should also say that I have a couple other expenses that probably seem like luxuries but I cant live without them

You'll be surprised just what you can live without when you go hungry or don't have a roof over your heard.

but i want to go as far under as possible because i am a worrier and just want to feel like its a slam dunk. So i want to maximize but not in an unethical way or especially not in a way that raises eyebrows. Also this is just a forum so I figure I should push a little and see where the push back shows up: that way I can get a feel for the whole situation.

I think you've pretty much summed up what you're looking for. Remember the Karma thing.

[Moneypenny]

I guess my main question is can I really bite the bullet and pay this heap off (60K): i dont see how a few hundred dollars a month is going to do it. I am not sure how the diff between cellphones or not, one car or not, is the diff between bk or credit counseling, or 13. Its just such a small dent.

The other question is whether a brand new car is a risk: i am afraid of risk. So, is it really true that a used car is a better idea? I am more than 6 months out from filing.


I should also say that I have a couple other expenses that probably seem like luxuries but I cant live without them:

1. I need to fly my family of 4 coast to coast once a year for Xmas with my aging parents

2. every couple years I have to do research overseas for my job for at least 2-4 months at a time, and I have to pay to bring my family with me: I cant bear to be separate from them for so long.

I know that these huge expenses wreak havoc with my debt paying ability, but I just cant alter these things. Family comes first its just not negotiable. I will happily go to debtors prison as long as my family comes with me! (that doesnt sound the way I meant it!)

Thanks so much and I do appreciate the words of caution from the moderator and others. To tell you the truth I do not know what the hell I am doing. I am confused and frightened. I also have no realistic idea about my actual expenses or where the money is going. If I did, I probably would not have gotten into this mess. I feel stupid now, but honestly I did not even know how much I owed until recently. I didnt know how much i made either. I just totally ignored everything.

My main thing is I am afraid that my old cars will break down and I have no transportation to work post-bk, that g-d forbid my wife died how could i pay anyone to watch the kids while i work (my job is super-full time), and there are also plenty of things that are apparently normal expenses that we do without in our failing attempt to pay back credit cards. might as well roll those normal expenses in.

i was just kidding sort of about the dog. my girl wants one and if it works... well anyway i am religiuous and would not let harm befall any creature just to balance my accounts. sorry for the bad joke!

As i increasingly look into this it looks like i can get under ok, but i want to go as far under as possible because i am a worrier and just want to feel like its a slam dunk. So i want to maximize but not in an unethical way or especially not in a way that raises eyebrows. Also this is just a forum so I figure I should push a little and see where the push back shows up: that way I can get a feel for the whole situation. So thanks so much for pushing back! Thats what i really need.

Any further advice is super appreciated.

[OhioFiler]

i am under my state mean (CA, sacramento), however i am way off when i do sched j.

if i do a bunch of things 7-6 months prior to filing, is that real bad?

I can finance and buy a car, i can up my auto coverage plus the new car, i can take out life insurance, i can get a new cellphone plan, etc. I actually do need all this stuff but I dont want to be asked about it.

Will this all look bad? or even if it looks bad, will it matter? I realize the answer might depend but i am here on the forum to get some idea of what to do.

i really want a ch7

thanks,

mmp

Buying a new car before BK is fine. If the payment fits your post-bk budget then do so.

Often when one first looks at schedule J they don't realize how inclusive those categories really are. If you really look at your actual expenses you are probably fine without boosting expenses just to qualify.

[HHM]

What is the back ground here...if you really need all those things to get a negative DMI, what exactly is the financial problem here that requires a BK?

It's one thing to do 1 or 2 of those things if you are on the bubble, but to need to do all the insurance, new car, new cell phone etc., what is the issue. At some point it just doesn't work, not everyone can qualify for a chatper 7 no mater what they do, a chatper 13 is a good option because a chapter 13 is about control.

[jribe]

it's not generally looked upon well to get a "brand new" new car right before filing. Besides the fact that you can save thousands if you get one that 2-3 years old. I don't know where you income is- but 25k may seem to be a lot with a $470 payment. You could get a fully loaded accord ex that's three years old for under 15k (leather included) with a payment of about $285-300. I wouldn't put yourself in that much debt with a new car just to pass a means test.

And NO don't get a dog. There's too many poor unwanted dogs that get sent to the pound or put down because owners didn't really want one in the first place; or didn't think through ownership

Exactly-- i have been cutting back, and all my disposable income has been going to cc's.

As for the IRS standard of living, i havent made the comparison yet. the sched j i am using (see my other message about Check Over my sched j) has a lot of little categories that are probably implied in the broader IRS categories. Will take some work to check that over but that is a good question. A few of the IRS categories are to someone like me off the hook! I dont spend that much on clothes for half a year let alone one month (although i can change my habits).

unfortunately i only have fish! they need medicine and food only. should i get a dog. ha ha.

no but seriously, should I get a dog?

thanks so much i really need this help. have to decide on a car soon. I was going to get a Honda Accord Ex with a sticker price of 25K, and monthly payments of 470 i think. I have a pre-approved loan (last time i can say that!). Oh, which makes me think: is it possible to not get a 60 month loan and instead shorten it to drive the payments up?

MMP

[Moneypenny]

Exactly-- i have been cutting back, and all my disposable income has been going to cc's.

As for the IRS standard of living, i havent made the comparison yet. the sched j i am using (see my other message about Check Over my sched j) has a lot of little categories that are probably implied in the broader IRS categories. Will take some work to check that over but that is a good question. A few of the IRS categories are to someone like me off the hook! I dont spend that much on clothes for half a year let alone one month (although i can change my habits).

unfortunately i only have fish! they need medicine and food only. should i get a dog. ha ha.

no but seriously, should I get a dog?

thanks so much i really need this help. have to decide on a car soon. I was going to get a Honda Accord Ex with a sticker price of 25K, and monthly payments of 470 i think. I have a pre-approved loan (last time i can say that!). Oh, which makes me think: is it possible to not get a 60 month loan and instead shorten it to drive the payments up?

MMP

[liz417]

Nothing wrong with pre planning your bk. I drove an old clunker (no monthly payments)and purchased a new/used (less than 20k miles) vehicle less than 1 year before I filed BK. Before I considered BK I had cut back on EVERYTHING, when I decided to file I needed to "fluff up" my expenses, I got cable TV back, added a home phone with all the features, increased my cell phone plan, took my animals to the vet for checkups (and everything else), stuff I had put off because I was soooo broke trying to make ends meet. You get the picture. I qualified for a ch 7 with a $-123 DMI All that planning worked or I would have been stuck in a ch 13 for over 5 years!!! My 1st attorney told me I would be in a ch 13 plan at a $400-500 month payback.....so, a little "planning" helped
Good Luck!

[bxphae]

Nothing fraudulent about getting reliable transportation since, credit will be harder and more expensive to come by post bk.
Not sure what your point is about debt to income ratio-nowhere in the bk code is such a thing discussed.
You havea right to live a reasonable lifestyle. For most of us, some life insurance is necessary and prudent. A lender is going to require full auto coverage.
Just get a reasonable ride be it new or slightly used. The big thing is affordability and dependability. You want something with some warranty. Just don't show up in a $70K Jag.

I may have worded it incorrectly, but by increased debt-to-income I'm leaning towards him having less disposable income to a point of having negative figure after monthly living expenses are added up.

MMP, if you don't mind me asking, what type of car are you looking into, or better yet, what monthly payments are you aiming for? Cell phone?

What happens to your disposable income if you inflate it to the IRS standard of living (ei. does it increase or decrease)?

[keepmine]

What is your goal with this? esp. racking up a higher mortgage payment? To keep these items? Meet a higher debt-to-income? Isn't this considered fraud if you know you're filing in the first place? <----not accusing, just more curious and looking out for a fellow BK'r

Nothing fraudulent about getting reliable transportation since, credit will be harder and more expensive to come by post bk.
Not sure what your point is about debt to income ratio-nowhere in the bk code is such a thing discussed.
You havea right to live a reasonable lifestyle. For most of us, some life insurance is necessary and prudent. A lender is going to require full auto coverage.
Just get a reasonable ride be it new or slightly used. The big thing is affordability and dependability. You want something with some warranty. Just don't show up in a $70K Jag.