Another car question

[doc10house]

We've got 2 cars...one is a 2005 Accord (which I downgraded to when I first lost my job), and has zero equity. The other is a 2001 Chrysler minivan, and we owe between 2000 and 3000 on it yet. Here's the question:

If we're planning on filing Ch. 7, does it make sense to go ahead and pay the balance due on the van? Will that make us more likely to be able to keep it, or more likely that it will be liquidated in my bankruptcy because I'll then have some equity tied up in it? Thanks.

[keepmine]

The answer depends on how much equity your state allows as a vechicle exemption .

[FilingOnMyOwn]

Its not guaranteed that you could keep it either way, so I myself would not pay it off. If you have the 2-3 grand just sitting there, that is money you would want to use to file, or stock up on necessities. Plus, if you did pay off the van, that payment could be viewed as preferential by the trustee and you could end up in trouble for it.

[SinkingFast]

We're in IN, and our attny said,.........

Trustees are much less likely to take an asset if you have a loan against it.

Trustees have costs to sell. And they quick sell. So Trustees don't get Premo price paid for assets.

Plus, your attny is gonna apply some portion of your exemptions against the van. The first person to get paid out of an asset that's been siezed with an exemption on it is YOU. Then the Lender. Then the Trustee gets whatever's left over.

Siezing an asset with a lien already against it could get messy for the Trustee. It's pretty much gonna be a factor of how much the van is worth, how much you owe, and how much exemption your attny will place against it. The Trustee's got to be fairly certain the van will bring the price or they just won't mess with it. The Trustee will either out right abandon it or he/she will negotiate a deal with you to keep it.

I just looked at NADA and Edmund's.com and you're probably talking about $10K in value, give or take, with 50K miles in decent condition. Say you owe $3K and your attny puts $3K-$4K in exemption against it. That leaves $3K-$4K kinda dangling in the breeze so to speak. The Trustee will sell quick, so he/she won't get the full $10K. Plus, the Trustee hires someone to handle the sale for them. There goes roughly 10% of the sale price.

If the van needs some sort of repair, go to a shop and get estimates to fix body damage or perform engine repairs. Ding the value if you can.

But like FOMO said, don't pay off the note. The Trustee could go back to the Lender to get that money turned over to the Court. Use the money to pay for some other essentials for yourself and your family.