Updates on progress towards Chapter 7 -- and questions/input requested?

[NoMoreCards]

EXEMPTIONS? -- I am planning on getting the mechanic to write up an estimate and his opinion of the RAV's inability to be a daily driver. It is in poor condition (tear in seat, stains, dents, trailer hitch torn off -- don't ask! -- missing grill, etc.). KBB Fair value is $2775. I should have exemption left over from my house. My Camry (2001, 190K miles) in good condition should come in around $4000, and the Subaru looks like it is worth around $19K private party value -- we paid $14,500. Do you usually us trade-in or private party value? Will the trustee have problems with my having three cars, if I can show that having just two would increase my car insurance rates from $3100 to $6500 a year?

Thinking as I would expect a Trustee to think....
Buying your son a car (who I am guessing is under 18 years old) a car, with a monthly payment of 442, just before BK filing would be a problem. The things you are listing as problems are mostly cosmetic issues. I am not saying the RAV isn't in bad shape mechanically, but if you present your reasons to replace this as "dent, stains, rip in seats...", does not look good.
Also, filing a contract from 2006 with the courts just before BK filing raises a huge red flag.

I highly suspect you may have problems with the BK as it is laid out here.

Tip on the car insurance aspect...list your son as the primary driver of the 2001 vehicle, and you on the new car. Talk to your insurance agent, but that is what mine suggested when my children were young drivers in the home. As long as they are covered on A vehicle in the house, they are covered on both cars. That way you dont need to keep the RAV as well.

All the best.

[sillywalks]

frogger --

What else could I do regarding the dying car? Believe me, I did not want to incur more debt, but a car is not a luxury in this world of ours! My understanding from reading (and reading) on these boards is that it is pretty standard stuff for people to get a more reliable car before filing. Usually, I guess, people do it before their credit rating implodes, but that was not how it worked out for me.

[sillywalks]

Keepmine -

If my mom is listed on the car title as the lien holder (as a business would be), it should be treated as a conventional car loan, should it not? I would have gladly gotten financing, but my credit is practically in the negative numbers and there was no way I could qualify (I tried). The car he was using cannot be used as a daily driver at this point -- what else could I do? My son is still considered part of my household (full-time student) and the RAV he was driving and the Subaru he is driving now are MY cars. Even if the trustee chose not to allow the payment, I will still come under the means test (even with the renter's payment). If I have evidence the car is not safe to use as a daily driver and would cost more to repair than it is worth, what objection can the trustee have? Any suggestions for answering any objections you can think of?

Alas, I realize that perfecting the lien on my home now, rather than in 2006 when I bought the home, is not a great thing. As I said, I do have an agreement I signed when she loaned me the money for the house in 2006, and we can show that she is the lien holder on my brother's house for the same amount (hopefully showing what was intended). Maybe it won't hold up, I don't know. I don't think it will even be an issue, because I don't think I have more than $10K in equity in my house. I was just trying to get my ducks in a row and be sure that my mother's claim is legally represented (in the worst case that somehow I have to sell my home/give it up, so she would get back some of what she loaned me). Plus, we really should have done it in 2006.

I suppose the trustee may ask who is driving the second car, but will it matter? Is it really any different than buying myself a car? If need be, I can give my high mileage vehicle to my son to drive and drive the Subaru, it just seems kind of silly. He drives more than I do so it seemed smarter to let him drive the newer (and more reliable) car. I guess that is what I will tell the trustee, too!

If I'm right and I do not have any equity in my house (so the lien by my mom does not matter) and there is a legally filed lien on the Subaru (with proof of need), do you still think there will be problems?

[keepmine]

Aren't people always talking about buying new cars before filing? Or is that just for a 13? We are in a very similar position with old cars...

The problem with this poster is, she has involved family in her bk.

Nothing wrong with buying relaible transportation before you file but, don't let family get involved in the financing.
Plus, taking on a $15K obligation for her son on the cusp of bk is going to cause problems. I'd doubt the trustee is going to approve a $442/month car payment for her sons car as a reasonable expense on schedule J.
Then, the matter of filing a contract and perfecting a lein on her home years after the fact. This poster is likely going to have a rocky ride.

[keepsmiling]

Aren't people always talking about buying new cars before filing? Or is that just for a 13? We are in a very similar position with old cars...

[frogger]

If I were the trustee, I would give you a lot of grief about continuing to incur new debt while filing for bk.

[sillywalks]

Hello, all. I am in a holding pattern regarding my Ch7 filing -- still hoping to wait until summer so I don't have to miss work. If I can make it the next 4-6 weeks without garnishment, it should all be good (as far as work!).

New information and questions!

1. The car my son has been using (a 1998 RAV4 with 200K miles) is on it's last legs. It quit, and after $800 to get it running again, the mechanic said that it will take over $2500 to fix all the issues with the car. The RAV was originally my mom's, which she gave to me to drive, which I then gave to my son when his old car died. My father (who died in 2003) gave the RAV to her, and so she wants to keep it for sentimental value and to drive in the winter when it snows.

FAMILY LOAN? -- My mom agreed to loan me $15K to purchase a reliable car for my son to drive. We found him a car and purchased it this weekend. My intent is to have her listed as a lien holder on the car title, and to have the loan terms notarized. The terms we agreed on are payments of $442 per month, 4% for 36 months, and returning the RAV to her. Is this going to be a problem for the trustee?

KEEPING THREE CARS? -- Complication -- when I called to get insurance on the the Subaru my son will drive, I was quoted $6500 per year!! [insert heart attack sounds here] So, it is going to be cheaper to keep the RAV on my insurance as my son's primary car. I also had to increase my deductibles and go to liability only on the RAV to get the rate to $3100 per year. However, keeping the RAV on my insurance means I have three cars, and I worry about the exemptions (which cover only two cars).

EXEMPTIONS? -- I am planning on getting the mechanic to write up an estimate and his opinion of the RAV's inability to be a daily driver. It is in poor condition (tear in seat, stains, dents, trailer hitch torn off -- don't ask! -- missing grill, etc.). KBB Fair value is $2775. I should have exemption left over from my house. My Camry (2001, 190K miles) in good condition should come in around $4000, and the Subaru looks like it is worth around $19K private party value -- we paid $14,500. Do you usually us trade-in or private party value? Will the trustee have problems with my having three cars, if I can show that having just two would increase my car insurance rates from $3100 to $6500 a year?

-- I just found out my health insurance payments will be going up 20% in July (they talked about increasing them by 60%!!). That will mean an extra $60 a month or so.

-- My car insurance will increase from $250 to around $300 or so a month.

TENANT LEAVING, WAIT TO RE-RENT? -- My basement tenant has decided to buy and house and will be leaving within the next month. That means $650 less a month. I will re-advertise for a tenant, but it is tempting to wait until after the bankruptcy -- is that a bad idea? I was also thinking of increasing the rent to $750 a month, but obviously would rather not have that income when I file bankruptcy. However, if I am planning on renting it out in the future (assuming I can find a renter) should I just go ahead and do it? Will it throw up a red flag to the trustee?

-- I have gotten my tax refund. The state was around $1000 -- which ended up going to pay for my cat to be diagnosed with and treated for diabetes in January. The federal return came in at $3900 -- so far about $1000 has gone for car repairs. Since I am keeping my Camry, there is another $500 in work that needs to be done to keep it running. I also stocked up on cat food and need to buy my 3 months of Rx meds (~$400). For the rest, I was thinking of paying extra on my car insurance -- that is okay, right?

-- How do I account for the fact that we do not know what the state will do regarding our pay next year? This year we had 10 furlough days -- next year it could be more, they could just wholesale reduce pay, or any variety of things. Do I just mention it in my paperwork? Print off articles that talk about the state's budget shortfall and potential solutions?

Can I just say, this bankruptcy stuff is insane, and can create bad habits! It discourages saving money. On the plus side, I have acclimated to life without credit cards -- though I'll be screwed if the banks limit debit card purchases to under $100!!

NEWLY FILED LIEN? - Oh -- my mom lent me (and my siblings) money for a downpayment on a house. We had signed a contract, but it was not legally filed with the court. With my impending bankruptcy, we had a lawyer draft a legally binding contract and I filed it with the court. Is the trustee going to give me grief about the timing of the filing? Will a copy of the signed contract (made in 2006) be enough? My brother and mom did file a lien through the courts for his money (because he was getting married, to keep it separate and protect his future inheritance).