Buy a new car to qualify for Ch7?

[TooMuchCredit]

Yep 100K will get the UST in a lather to begin with, although many get through the scrutiny just fine...the new car won't go over well, but worst case scenario they convert to a 13.

Even in a 13 they might object to a payment above the $489 standard, especially if the amount paid to the unsecured is small.

You'll possibly be faced with a "good faith" objection from the trustee.

[whipster1]

Yep 100K will get the UST in a lather to begin with, although many get through the scrutiny just fine...the new car won't go over well, but worst case scenario they convert to a 13.

[shabam]

Interesting. I don't know that I guess luxury is subjective. A 40k car would go a long way to get me to pass the means test. I drive a VW GTI now, car costs $28k. I make over $100k/yr, not sure if taking on a car thats $12k more is excessive, but I realize thats up to the UST and it could be shaky grounds. There are alot of pickup trucks with extended cabs that cost more than $40k.

$100k is already going to raise red flags. I would not be adding more fuel to the fire.

[Bell30656]

When I first began interviewing attorneys (free consultations) most of the lawyers told me that I didn't qualify for CH7 and would be in CH13. Then I ran into the attorney that I actually used. His approach was different. He advised me that I needed a more reliable vehicle. When I asked why, he shrugged and said $400 to $450 more reliable per month. Then he told me not to get any raises or make any bonus for the next three months. Finally, he told me not to make any credit card purchases for the next three months.

Bewildered, I was full of questions. He handed me back a stack of paperwork, told me to bring them with me to my November appointment with 3 months worth of pay stubs, bank statements, etc.

While he didn't tell me the reason why, I found the answer on here and in the schedules that I used when playing with a trial version of bankruptcy software that was the same as what he used. I was over the means test by just a little bit. The car payment was enough to fix it.

[debtinohio]

Interesting. I don't know that I guess luxury is subjective. A 40k car would go a long way to get me to pass the means test. I drive a VW GTI now, car costs $28k. I make over $100k/yr, not sure if taking on a car thats $12k more is excessive, but I realize thats up to the UST and it could be shaky grounds. There are alot of pickup trucks with extended cabs that cost more than $40k.

Yeah, my cloth seats, no navigation, 2009 Dodge Ram 4x4 Crew Cab was $42,000...of course, since Dodge is in Ch11 (the irony) it's final price was $28,500, lol.

[backtoschool]

They took on debt 2 days before they filed. Unless they decided to file the day after purchase, completed their schedules that evening and filed the following morning I'd say they took on debt knowing they'd be filing in 2 days.

Oh, an AP is definitely a risk for the appliances I agree.

[OhioFiler]

Although I probably shouldn't comment on this post OhioFiler, since I have berrymom35 on my permanent ignore list, but I do think that appliances would be seen differently by the trustee than a luxury car.

They took on debt 2 days before they filed. Unless they decided to file the day after purchase, completed their schedules that evening and filed the following morning I'd say they took on debt knowing they'd be filing in 2 days.

[Klesko]

I would be very careful doing this right before filing. If it was say 6 months before I would feel better about it. You can increases your expenses other ways.

$489 is the standard amount, anything over can cause a red flag.

[backtoschool]

This doesn't seem quite right to me. Was this debt discharged?

Although I probably shouldn't comment on this post OhioFiler, since I have berrymom35 on my permanent ignore list, but I do think that appliances would be seen differently by the trustee than a luxury car.

[OhioFiler]

This is not a car but we bought a washer and dryer with a monthly payment of $120 per month two days before we filed and put it on our schedules and it was not blinked at. A big car payment is a lot different though.

This doesn't seem quite right to me. Was this debt discharged?

[StartingOver08]

Well its a 28k car, so its either a 550/mo payment for 60 mo or like 670/48 months. I wish I knew whether they would think a 28k volkwagen is an excessive car to drive.

Isn't this a car you have already and your payments are already in place?
Or is this a car you are planning to finance shortly. From your first post, I thought it was one that you are currently driving. Based on the Trustee's here in the Southern District - they are accustomed to people coming into BK with very high dollar vehicles. IMHO I don't think the volkwagen will raise eyebrows. But if you buy another high dollar car now and file in three months, that may not fly as BTS has a good point about the "totality of circumstances". You probably will have interest from the UST just based on your details so far. Before you go out to buy a vehicle, check all of your expenses in detail now. Even before you meet with more attorney's - you need to get as much as you can out of the attorney interview. This vehicle issue would be one to run by all of the attorney's you interview.

[jribe]

No- a $750 car payment will be considered a luxury by the trustee. As others have stated - if you're basically under roughtly $500 it's allowable. But going out and almost doubling your car payment would not be acceptable from the trustee. Do you need two cars, one for a spouse? Then another car would be okay..

You'll need to find different allowable expenses..

I ran the means test at NOLO www.legalconsumer.com

It said I had disposable income, my car payment currently is 450/mo. However, If I had a 750/mo car payment then I would no have any disposable income.

Wouldn't it make sense to go out and buy a new car, right about 750/mo, then I would fail the means test? I still have excellent credit, I am just out of rope, and my business has failed, but I am sure I could swing the loan. Not sure if this is a strategy however, and will talk to a lawyer about it. Any comments?

Signal

[signal]

Well its a 28k car, so its either a 550/mo payment for 60 mo or like 670/48 months. I wish I knew whether they would think a 28k volkwagen is an excessive car to drive.

[berrymom35]

This is not a car but we bought a washer and dryer with a monthly payment of $120 per month two days before we filed and put it on our schedules and it was not blinked at. A big car payment is a lot different though.

[tdawg]

I believe the way it works is that they cannot object to any secured amount on the means test for a car payment, so it wouldn't matter if it was $2,000/month. But on the Schedule J, they can say, "Well, if you got a cheaper car with a payment of $478/month, then you could fund a Chapter 13, so that's what you're going to do."

Again, I'm thinking if you do this, it would be best to wait for a few months before filing. And I'm assuming you plan to reaffirm this debt. And if you haven't retained a lawyer, I don't see how there's an issue. You've just been exploring and learning about this stuff, that doesn't mean you're insolvent. This is all just my opinion though, so do what you're comfortable with. By the way, there are limits as to how a lawyer can advise you about taking on more debt, so keep that in mind if you consult with a bk lawyer.