Car Ownership vs Operating Costs and the Means Test

[anonymuse]

This is long, but could make a difference since it seems that the bk laws put people at a disadvantage who are frugal and don't buy a car on the eve of bankruptcy.

http://www.creditslips.org/creditslips/2006/09/chickens_in_the.html

[GoingUnderInNV]

I just discovered that myself. Odd as it sounds, the standard "deductions" that the means test allows is actually HIGHER if you owe money on a second vehicle! There's a standard deduction for the first vehicle (something like $410, but I'm working just off memory), but if you have a second vehicle that you still owe money on you get another $270 or so! Man! If I'd known that I'd have bought a new car a year ago!

[LostOne0069]

This may REALLY help me out.

I curently own 1 car, and owe a ton on it... $669/month payments. My attorney is trying to tell me I'm going to have to do a chapter 13 because of the way my medical benefits show up on my paycheck stub as income and thus puts me over the median income.

When he did the means test calculation, he shows me as having $411/month left over for chapter 13 payments.

Using this new information, I can go to one of those "buy here/pay here" used car places... pick up some $1000 clunker on a 6 month payment plan... plug the expenses into the forms and BANG! I'm now into negative numbers on the available for chapter 13 payments.

Anon, THANK YOU for posting this!

[lrprn]

This may REALLY help me out.

I curently own 1 car, and owe a ton on it... $669/month payments. My attorney is trying to tell me I'm going to have to do a chapter 13 because of the way my medical benefits show up on my paycheck stub as income and thus puts me over the median income.

When he did the means test calculation, he shows me as having $411/month left over for chapter 13 payments.

Using this new information, I can go to one of those "buy here/pay here" used car places... pick up some $1000 clunker on a 6 month payment plan... plug the expenses into the forms and BANG! I'm now into negative numbers on the available for chapter 13 payments.

Anon, THANK YOU for posting this!

Be careful, LostOne....if you are filing within the next six months, adding a car on to your debt load right before filing could lead a trustee to suspect fraud and start looking through your case with a fine toothed comb. Be sure you have a very justifiable reason for needing a new $1000 clunker right now in case it becomes an issue later on.

[LostOne0069]

Ah, see that's the beauty of it. I DO need another car. I only have 1 vehicle and we have 4 kids... so when I'm 40 miles away at work my wife is at home with the kids with no transportation. It is extremely reasonable for us to need another vehicle... Now, if we bought a $30,000 car, I could see them looking at us weird... but $1000???

Besides, I actually don't think I'm going to need it. I'm betting that I can get the trustee to agree that my medical benefits don't count as income and thus we're WAY below the median and qualify for a chapter 7 with no problems whatsoever.