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

[sillywalks]

Keepmine --

Doesn't a UCC-1 only apply when a debtor is delinquent with regard to the creditor's specific debt and agreement with the debtor? In other words, it is not something my mom would file unless I was not paying her as agreed? Or would she file it when I file for bankruptcy?

Since at this point the title has not been registered -- am I better off letting her register the car and loan it to my son to drive?

[keepmine]

I'm gong to strongly suggest you get yourself to an attorney before you do anymore thrashing around and then ask for advise after the fact. For darn sure I wouldn't take out a loan and then repay an insider $15K and then file bk.
You really need to do a search using the term UCC-1. If it isn't properly filed, the contract and lein your mother has on the car is worthless. The trustee can just take the car and sell it for the benefit of your creditors.
We've had it happen to a few members and one of the mods {Minnymouth} lost her manufactured home when her lender didn't perfect their lein.

[sillywalks]

Hey Pandora. I am, of course, concerned how the trustee will look at things, too. It's just frustrating, because what would seem 'reasonable' to most does not seem to fall into the 'reasonable' category with the trustee!

At this point, mom has not 'given' me the $15K - she loaned it to me with the agreement I will pay it back as I said. There has to be a way to make that loan show as being legitimate to the trustee, doesn't there? That is the frustrating thing -- it IS legitimate, I really did BORROW the money -- so the Subaru does not have $15K in equity, so how can the trustee say it does? If mom is listed as a lien holder on the title, they cannot simply take the car, can they? Because then I would owe the $15K and NOT have the car to drive! Isn't the law more concrete -- does the trustee not have to decide based on what is (i.e. the perfected lien) vs. what 'could be' -- or are they allowed the latitude to make 'what if' assumptions? I mean, technically, couldn't any lender do the same as the scenarios you mentioned? (not that they would! But, she wouldn't either!)

Regarding income -- my son does have income, but does not contribute to any household expenses while he is in school. He does well to pay his rent, food, and gas! I cover his health and car insurance, plus help with gas, food, and medical expenses as needed. Thankfully, he's pretty healthy, except for needing about $1000 in dental work soon.

I have not included the renter in household size, but I did include their rent in my income (less expenses). The info below is my new numbers, without the renter's payment.

Income -- 4644
-- Annualized current income = $55,728 -- median for household size of 2 is $51,184.
-- I use standards for health care, food, clothes, mortgage, and non-mortgage expenses = 1,088
-- Housing and utilities adjustment ($449 mortgage, $200 utilities - which is low -, $17 HOA, $250 HVAC/lawn/maintenance/repair, $60 pest, $140 phone, $40 garbage) minus allowed non mortgage expenses = $725 line 21
-- Transportation (2 cars): Operation = 478, ownership=$400 for both vehicles (this is NOT including the payment on Subaru)
-- taxes: $401
-- Deductions: $257
-- life insurance: $50
-- job education req.: $50
-- health care: $365 (Rx, dr. copays, chiropractor, dentist, eye doctor, etc.)
-- other: $24 internet
Total expenses allowed: $3838

Health insurance: $435
Contributions to family members: $250
Charitable contributions: $75
Total = $760
Debt payment (house) = $1395
All deductions allowed: $5993
line 18 = 4644
line 47 = 5993
Monthly disposable income = -$1349
60 month disposable income = -$80,940

Those are my numbers -- do you see any problems? That is without the car payment, and without the renter's payment. One of my questions is if I do not re-rent the basement, is the trustee going to question things? Even if I do re-rent at $750 (which I would like to do), I should still be at -$749 (taking $150 out for expenses of renting).

Any suggestions? My thought at this point is to just have mom and son on title, let mom or son carry insurance and make the insurance payments. Or, get some 'bad credit' financing at some hideous rate and repay my mom, thereby having the car with an 'acceptable' finance company.

Thanks!

[Pandora]

morning silly

Oh, trust me, I understand where you're coming from when it comes to kids, college and wanting to provide for them, and I dont believe anyone is saying you're trying to "get around" anything. I believe the concern is how the trustee will view things.

As to our daughter - yes she provides for 100% of her expenses and no, she doesnt use student loans to pay for anything other than college related items (tuition, books, etc). She has roommates (not on campus) and as to whether or not she can "afford" her chosen lifestyle remains a contention between us and her. :/ We help when/if she needs something she cannot afford (like a car repair or another necessity) otherwise she has chosen to do her own thing. She is learning very quickly that money doesnt grow on trees and to live independently requires sacrifice and copious amounts control. Its not always easy for her however when we get the phone call of "yeah went to this concert / spent this on XXX / drove friends around since they have no vehicle but I have no money for (insert whatever here)" then we tune it out and tell her "Sorry you want XXX, perhaps you need to give your budget another look so you can get XXX. Maybe tell those friends that you run around to help pay for gas, $5 wont kill them - or tell them to take a taxi/bus next time." She ususally quiets down - doesnt mean she likes to hear it but....its the way her father and I were raised and the way both our children have been raised. Is it for everyone? No...its not - and I dont fault anyone for paying for their kids until they graduate college, different strokes / different folks .

As to our non-running car, average run of the mill / classic - well...depends on who you talk to LOL! It's a 69 Charger however as previously stated, its not driveable currently and was classified as a parts-car even though everything is intact it does start, and all parts to repair it are here from top to bottom, inside and out. Value was placed as $1500 I believe, based off of county property records as well as KBB. I think your RAV is going to have to be valued at KBB / Edmunds, but you should average the 2 values to come up with a truer number, also look online for items in similar condition to yours and use that as well. The lower the better, but again it all really depends on what your trustee uses as valuation.

The Subaru: As I dont know your expenses vs. income, I was basing a scenario of a Ch. 13 due to your being over median as well as mom giving you the $15K to purchase the car outright - you will have to exempt it as you now have instant equity. The other issue is that you must be able to exempt the equity in all 3 vehicles you currently own by using other exemption allowance areas. If you cannot exempt them fully you will have to 1. buy them back from the trustee via payment plan (if allowed) or immediate payment; 2. turn them over to the trustee for sale in which you will get the allowed exemption amount returned to you upon sale, or 3. convert to Ch. 13 in order to keep them through the same methods above to keep them. Either way you need to have (according to your values) $22K to exempt the vehicles through your auto exemption allowances and any other you're alloted.

The next concern is that even if your mom gets a lien to the vehicle, the trustee may view it as preferential - your mother could easily say 'yes she owes me therefore I'm entitled to $442 monthly or I'll repo the car', however your mom could just as easily turn around, give you the $442 every month or if denied by the trustee - repo the car but give it to you anyway. See where the areas of concern are? Think like a trustee...they're working for the creditors to get as much money as possible.

Regarding your income to expense ratio - you need to ensure what counts as income, i.e., your son works and has income so it may be counted as well as the rent/future rent. Does your renters income count - is he/she considered in household size? Cant claim certain things for vehicles owned outright, etc etc etc. We're basing all of this off of what you claim is negative DMI into the hundreds however the fact of the matter is it all boils down to what your trustee determines is "reasonable expenses" in your area as well as what IRS standards are. If you're over median but neg DMI, I believe you can only use the IRS standards on several items.

Bottom line in everything is what someone else thinks / writes to the trustee is just an opinion of what they perceive, which in turn means that the trustee also can formulate his/her own opinion/value on the very same thing and come up with something completely different.

All of these things should be discussed with a lawyer who knows your entire story - especially since your mom gave you $125K to purchase your home yet no lien was recorded. You've got too many variables to try to work this yourself IMO.

[sillywalks]

From other posts I've read, being pushed into a unwanted 13 is a concern. That might help explain things a bit better.

The car payment I expect is needed to keep the expenses up.

Actually, I don't need the car payment to keep my expenses up -- in fact, with my renter leaving, I will be probably well into the negative.

[sillywalks]

silly

the difference is that its your family who's trying to place a lien on a vehicle, thereby getting $442 a month. That is apples, oranges and spades apart from a lender holding the note and receiving payment. Its just the way trustee's look at it. What you should've done is discussed everything with a lawyer before you did it (assuming thats the route you're going) - if you're filing pro-se, you still should've at the very least met with a lawyer (free consult or paid) to discuss ramifications of what you were planning on doing.

As to your son, why didnt he obtain a car loan on his own using grandma as a co-signer - as well as his own insurance policy? I'm not quite understanding that entire scenario as our 20 y/o pays for her own car, insurance, apt, bills, etc and goes to school F/T while working a job on her off days / evenings / weekends.

I agree with the others - I believe the trustee is going to negate the car for your 22 y/o and you very well may end up in a Ch. 13 even if qualified for Ch. 7 from means test.

ETA: I dont believe your argument regarding the RAV will uphold - the trustee doesnt care if it's seats are torn, etc - the only thing he/she cares about is can it bring any $ to provide to the creditors. The answer is yes. We have a car that is in parts that we had to exempt for the trustee not to take it, so even a non-running car has value.

I appreciate your input, Pandora. I did not consult with a lawyer, mostly because I do not have one yet and my son needed a car he would be able to use to drive to school and work. As to why he did not get one on his own -- one, his insurance on his own would cost him over $4500 a year! He works over 32 hours a week, but is only making $7 a hour. You say that you don't understand my situation because your situation with your daughter is different. That is true, every situation IS different. I am amazed that your daughter can afford to pay for everything on her own! Is she using school loans to supplement her income to cover everything? I know my son is doing the best he can -- for instance, today he is in class from 8-1, then works from 2-8. He works every chance he gets (except Sunday's, when it is closed).

Regarding the RAV, I did not state the cosmetic issues as a reason why the trustee would not want the car, only to show why I used the KBB "poor/fair" value, rather than the "good" or "excellent" value. Was your non-running car a classic car, or just your average, run-of-the-mill car? How much of your exemption did you end up using for it? I'm not sure what parts they could get off of the RAV (all the parts are 200K miles old, except for the radiator and the driver door, which had to be replaced). I'm sure they could give it some value, but I would guess under $1000?

Can you help me understand how the Subaru could push me into a Chapter 13? Even without the car payment I am several hundred in the negative on the full means-test calculation (the long form). Probably more than that, now that my renter is leaving the basement. I could understand it might make me an asset case -- although I'm still not sure about that because of the lien on the car, even if it is family it still means I do not 'own' the car outright, right?

It seems at this point the best thing to do is to put the Subaru in my mom and son's name, or to find some type of finance company who will loan me the money to buy the car and repay my mom the $15K -- would that work?

Ugh. I hate this whole thing! I am NOT trying to cheat anyone here (though some of the responses make it seem that others perceive me that way). I am just trying to get by and be sure my son and I have safe transportation.

What I am also hearing is that, fair or not, the trustee is going to have problems with my mom providing financing for a car. Is that true regardless? Is there no argument in response that would help in this situation? Because frankly, I'm feeling a little screwed and overwhelmed at this point. Anyone have any helpful suggestions? Please?

[NoMoreCards]

As to your son, why didnt he obtain a car loan on his own using grandma as a co-signer - as well as his own insurance policy? I'm not quite understanding that entire scenario as our 20 y/o pays for her own car, insurance, apt, bills, etc and goes to school F/T while working a job on her off days / evenings / weekends.

I agree with the others - I believe the trustee is going to negate the car for your 22 y/o and you very well may end up in a Ch. 13 even if qualified for Ch. 7 from means test.

ETA: I dont believe your argument regarding the RAV will uphold - the trustee doesnt care if it's seats are torn, etc - the only thing he/she cares about is can it bring any $ to provide to the creditors. The answer is yes. We have a car that is in parts that we had to exempt for the trustee not to take it, so even a non-running car has value.

From other posts I've read, being pushed into a unwanted 13 is a concern. That might help explain things a bit better.

The car payment I expect is needed to keep the expenses up.

[Exployer1234]

My trustee did question what year my car was. When he saw the car was a Lexus and paid for he immediately wanted to know what year and what is the value for the car if he sold it. This is my only car so I would been in big trouble if he took it from me. I told him well it does run, but it has a salvage/rebuilt title, 1993, with 233K miles. I said it does need some work and if I were to sell it it would be about 1K. He was not interested at that point. So yes the trustee would question anything he/she can make money from. If you are over your state exemptions in the first place then the trustee will want the assets to sell.

Can you son get a loan in his name for the car? I understand his grandmother may have great credit, but she could co-sign for the car. You would not be involved then in the transaction. Also your son should qualify for his own loans for school.

[Pandora]

silly

the difference is that its your family who's trying to place a lien on a vehicle, thereby getting $442 a month. That is apples, oranges and spades apart from a lender holding the note and receiving payment. Its just the way trustee's look at it. What you should've done is discussed everything with a lawyer before you did it (assuming thats the route you're going) - if you're filing pro-se, you still should've at the very least met with a lawyer (free consult or paid) to discuss ramifications of what you were planning on doing.

As to your son, why didnt he obtain a car loan on his own using grandma as a co-signer - as well as his own insurance policy? I'm not quite understanding that entire scenario as our 20 y/o pays for her own car, insurance, apt, bills, etc and goes to school F/T while working a job on her off days / evenings / weekends.

I agree with the others - I believe the trustee is going to negate the car for your 22 y/o and you very well may end up in a Ch. 13 even if qualified for Ch. 7 from means test.

ETA: I dont believe your argument regarding the RAV will uphold - the trustee doesnt care if it's seats are torn, etc - the only thing he/she cares about is can it bring any $ to provide to the creditors. The answer is yes. We have a car that is in parts that we had to exempt for the trustee not to take it, so even a non-running car has value.

[sillywalks]

Sillywalk,

Your mother had better properly perfect the lein within the time allowed by law or the trustee may well snatch that ride.
The majority of states use the UCC and require a UCC-1 be filed within 20 days of purchase to perfect the lein. Some states have there on procedures so you need to ask a lawyer in your state exactly where you stand on this issue.
I really think a trustee is going to have an issue with you financing a $15K car for your son and then paying $442/month to your mother while you were on the cusp of bk.
Your best bet was to let your mother finance the car in her name and let her grandson use it. Post bk, you could have begun repaying the loan.

keepmine -- So, what you are saying is I should have my mom fill out the title as the owner, have my son use the car, and just keep myself out of the picture. Can I still insure the car if I am not listed at the owner?

I don't see how they can 'snatch' a car that has a car with a legal lien on it? Whether the financing came from a bank or family, it is still money owed? Also, I could easily make this car MY primary driver and let my son drive my Camry. Ultimately, I need two cars -- so what is the difference?

[keepmine]

Sillywalk,

Your mother had better properly perfect the lein within the time allowed by law or the trustee may well snatch that ride.
The majority of states use the UCC and require a UCC-1 be filed within 20 days of purchase to perfect the lein. Some states have there on procedures so you need to ask a lawyer in your state exactly where you stand on this issue.
I really think a trustee is going to have an issue with you financing a $15K car for your son and then paying $442/month to your mother while you were on the cusp of bk.
Your best bet was to let your mother finance the car in her name and let her grandson use it. Post bk, you could have begun repaying the loan.

[sillywalks]

I am in exactly the same boat. Beater car, 93 minivan with 150K+ miles. Credit in the toilet, new driver in the house- just got license on Friday....aargh.... Was thinking along the same lines, could get my folks to get one of these great low interest car loans and have them lien the title....so no good? have been praying for years that the car holds out "just one more year" lol and prayers have been answered so far but I think I am pushing my luck now....

Seems like there is a very fine line between bk "pre-planning" and potential tt issues.... what to do...

This whole thing is such a minefield! I think I have read on the forums that doing a family loan can work, if it's done correctly? Maybe someone else can answer. I definitely know how you feel, keepsmiling! I hated taking on more debt, but there really were no alternatives. I am not planning on attempting to discharge the debt for the car (obviously), and I have not used any other credit since September/October.

Good luck -- I hope someone will chime in with something that will help you and me!

[keepsmiling]

I am in exactly the same boat. Beater car, 93 minivan with 150K+ miles. Credit in the toilet, new driver in the house- just got license on Friday....aargh.... Was thinking along the same lines, could get my folks to get one of these great low interest car loans and have them lien the title....so no good? have been praying for years that the car holds out "just one more year" lol and prayers have been answered so far but I think I am pushing my luck now....

Seems like there is a very fine line between bk "pre-planning" and potential tt issues.... what to do...

[sillywalks]

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.

NoMoreCards --

The cosmetic issues I listed were just to demonstrate that the Kelley Blue Book value would be Poor/Fair -- there are significant mechanical issues with the car, which I will have my mechanic specify along with the cost to fix them, as well as his determination that it should not be used as a daily driver.

My son is actually 22, but attends college as a full-time student.

Hopefully filing the lien on my house won't cause too many problems -- I am 99.9% sure I don't have any equity in the house anyway!

[sillywalks]

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...

Keepsmiling --

If you read the boards, you will find the frequent suggestion/encouragement to get a reliable car before filing -- probably preferably before your credit is shot. Unfortunately, that did not work out too well for me. I don't see the problem with using family for financing if you have no other choice...but maybe I'm wrong. I still did not have a choice!