car repo questions

[monlyba]

i'm trying to get all the details of my financial and personal situation in order so that i can file bk7 in the near future. one key element for me right now is that i have a car with negative equity and a 369/mth payment that i can't really afford. my thought for a while now has been to find a buy here/pay here dealer or borrow a few thousand from a family member to buy a cheap car from somewhere and then let the lender come repo my current car.

but tonight my parents told me that since my mom just bought a new car and my dad will drive the not-that-old car she had, they are giving me his older car (it's completely paid off and worth only a couple/few thousand i believe). i'm glad i won't be having to deal with a car payment (and higher insurance premiums) any longer!

however, i'm always thinking about bk in the back of my mind. what is the smartest way to go about this? my key questions are do i just not pay my car payment and avoid them and see how long it takes for them to come get my car? or should i let them know i'm not going to pay anymore and they can come get it whenever they want? and is there a certain amount of time after getting all this squared away that i should wait before filing?

i plan to go pro se so i definitely am concerned about it "looking like" i am doing anything fraudulent or sneaky, even though i really don't think i'm doing anything wrong.

[lrprn]

The biggest potential issue here is that the car your parents give you could be considered a gift you received within 180 days of filing and therefore be considered a part of your bankruptcy estate. This means the trustee could take the car if he/she thinks it's worth enough. Since in this case the car is not worth much, it very likely won't be worth the trustee's efforts to sell it to turn the money over to your creditors.

In North Carolina, the exemption for a car is $1,500. Look up the value of the 'gift' car at http://www.edmunds.com/used/index.html - average the dealer/paper/seller values. If it's below $1,500, that's good. If it's worth considerably more than $1,500, then the trustee might ask you to pay him the difference between what the car is worth and $1,500 to keep it. Chances are the trustee won't do anything at all - just want you to be aware that it may not be free sailing in this situation.

If you have a lawyer, be sure to talk this over with him/her. If not, make a few free consultation appointments with 2-3 bk lawyers in your area and put this question on your list to get their opinions.

[SinkingFast]

Don't just let them come and repo the car. Call the Lender, tell them you want to surrender the car. Arrange a time and place to meet with their Rep and return the car to that person. Have their Rep sign and date a statement that they received the car from you and maybe even note the overall condition of the car.

That way, the surrender takes place in an orderly fashion. You're not looking over your shoulder wondering when and where you'll be stranded without transportation. The costs of repo doesn't get tacked onto what you owe. Etc, etc, etc.

You aren't really doing anything wrong. But so many people have abused the system and pulled little schemes that it makes those of us who act in good faith look suspect.

From a Trustee's point of view,......... One point in your favor is you need transportation. The "gifted" car is replacing one you surrendered and you did not incur more debt with the aquisition.

And, of course, Lrprn makes a good point about the value of the car vs your allowable exemption.

Are you below the Median?? I know at one point you were unemployed. If you've gotten a job, will that income throw you over the Median 6 months from when you file?? Because the Trustee is gonna consider that too. The totality of your circumstances.

Also, you've got to keep in mind Schedule J and the Means Test. If you're still below the Median looking forward then the Means Test is not an issue. You'll stop on Line 15 and be done. But Schedule J is a different story. Without the car payment, can you make up the expenses of the car payment and lower insurance costs in other categories and still come out below $100, or even negative/mo?

[monlyba]

i'm still just babysitting and earning only $600 per month. i don't think i'd have a problem showing that i have plenty of bills that exceed that amount! i was a little worried about the vehicle being worth too much, but since it would be my only form of transportation i would hope everything would work out. i was thinking when we switch it all into my name maybe we should put on paper that they "sold" it to me for a few hundred or something like that? i don't know if that would make any difference since then it wouldn't be a "gift." the average value according to that site is $2638. i surely hope they wouldn't expect me to come up with around $1000 because of that. i'm not using an attorney because i don't have that kind of money!

[davids]

Repo

Don't just let them come and repo the car. Call the Lender, tell them you want to surrender the car. Arrange a time and place to meet with their Rep and return the car to that person. Have their Rep sign and date a statement that they received the car from you and maybe even note the overall condition of the car.

That way, the surrender takes place in an orderly fashion. You're not looking over your shoulder wondering when and where you'll be stranded without transportation. The costs of repo doesn't get tacked onto what you owe. Etc, etc, etc.

You aren't really doing anything wrong. But so many people have abused the system and pulled little schemes that it makes those of us who act in good faith look suspect.

From a Trustee's point of view,......... One point in your favor is you need transportation. The "gifted" car is replacing one you surrendered and you did not incur more debt with the aquisition.

And, of course, Lrprn makes a good point about the value of the car vs your allowable exemption.

Are you below the Median?? I know at one point you were unemployed. If you've gotten a job, will that income throw you over the Median 6 months from when you file?? Because the Trustee is gonna consider that too. The totality of your circumstances.

Also, you've got to keep in mind Schedule J and the Means Test. If you're still below the Median looking forward then the Means Test is not an issue. You'll stop on Line 15 and be done. But Schedule J is a different story. Without the car payment, can you make up the expenses of the car payment and lower insurance costs in other categories and still come out below $100, or even negative/mo?

I had two repos...

one car i drove months longer... then I called the lender and told
them where they could pick it up.. it took a very long time
before they got around to threaten me with the police, so
I figured it was really time to give it up...

the second car was brand new, I took it back to ford and told
them there it is...

if it want this over fast, then take the car back to where you bought
the car and tell them you are giving up the car...I was still
charged repo fees...I guess they can do what they want...
if you want to file BK dont let the repo drag out, the sooner
it gets on your credit report, the sooner you can begin.

be sure the repo is acutally on your credit report before you file...

[davids]

Car...

i'm still just babysitting and earning only $600 per month. i don't think i'd have a problem showing that i have plenty of bills that exceed that amount! i was a little worried about the vehicle being worth too much, but since it would be my only form of transportation i would hope everything would work out. i was thinking when we switch it all into my name maybe we should put on paper that they "sold" it to me for a few hundred or something like that? i don't know if that would make any difference since then it wouldn't be a "gift." the average value according to that site is $2638. i surely hope they wouldn't expect me to come up with around $1000 because of that. i'm not using an attorney because i don't have that kind of money!

somebody could get wise, and wonder why this $2638 car was only
sold for a few hundred dollars...that would be some type of
fraud.. personally, I would not go that route, if that is your
only vehicle, then I do not think they would take it from you.

if you are going about this yourself, I sure would not take any
chances, I would tell them the truth about everything.

[SinkingFast]

somebody could get wise, and wonder why this $2638 car was only
sold for a few hundred dollars...that would be some type of
fraud.. personally, I would not go that route, if that is your
only vehicle, then I do not think they would take it from you.

if you are going about this yourself, I sure would not take any
chances, I would tell them the truth about everything.

"Family" deals happen every day. So the fact that your parents sold you a car for a lot less wouldn't necessarily be out of line. On it's own.

BUT,........... Will your bank statements reflect a payment to your parents?? Nope. That could the get the Trustee to digging around in your finances to find out just where the money did come from. If you're hiding the money you bought the car with, you could be hiding some thing else.

So Davids is right. You're best off to tell the truth. That it was a gift from your parents and have your parents write a "Gift Letter" to that effect.

[jbr12]

I am about the have the lender come pick up my vehicle. My brother has his old car that he couldn't sell (like $700 car) so I am 'borrowing' it from him until after my bk and I can afford to save up for a new one. The title and everything is staying in his name, I am just using it and I will then sell it for him. Will this hurt my filing at all? Would I be better off putting the car in my name?

[monlyba]

I am about the have the lender come pick up my vehicle. My brother has his old car that he couldn't sell (like $700 car) so I am 'borrowing' it from him until after my bk and I can afford to save up for a new one. The title and everything is staying in his name, I am just using it and I will then sell it for him. Will this hurt my filing at all? Would I be better off putting the car in my name?

i'm no expert but i don't see how that could affect you at all... i'd keep it in his name if that was your original plan.

thanks everyone for the advice. i've always heard that you "can't" just give someone something like that... i remember when i was a kid and my grandpa sold my dad his old camper and they said it had to be a "sale" and not a "gift" so they put on paper that he sold it to him for $1. it may be a misconception in this state, but i've heard a lot of people say that you have to have some exchange of money. who knows... but i definitely don't want to give the Trustees any reason to dig deeper - i have nothing to hide, but having them suspect something and go hunting would be so scary! hopefully since it will be my only vehicle, i will have no issues keeping it. i'm not sure yet how i'm going to deal with the repo. i'm not even 30 days late on the payment yet, so it might take months for them to get to the point where they are threatening to come get it. i guess i'll wait until the old car is put in my name and all that... i need to figure out the order as well... cancel insurance, turn in tag, turn the car in? or cancel insurance, transfer tag, turn it in? i have no clue.

oh, and i don't really understand the reasoning for taking it back to the dealership. aren't they out of the picture now? i thought it was all between me and the lender once the sale was complete.