A real dilemma...help please

[toomuch]

Hubby and I are filing BK. We cannot file until our tax refunds come back because we are turning in our $$$ vehicles and paying cash for a used one. I am filing the taxes for 05 and 06 on Monday. 05 will be the largest refund but it can't be filed electronically so it will take 6 to 8 weeks to get here. 06 will be back in 3 weeks.

The problem is, the banks want the vehicles back or 3 months of past due payments. I can understand that.

To add to the dilemma, my Mom was dx with a rare, terminal brain cancer in January. She is 6 hours away and I have to be going back and forth to help out.

We are upsidedown on both vehicles. I would try to keep one if it meant the payment would make a difference in filing a 7 rather than 13. We did not pass the means test, but with everything else, we are borderline chapter 7.
However, if we can't file until May, due to waiting on tax refunds, we won't know until then what chapter we can file. So......not sure which vehicle to try to keep or just let them go back.

I called the paralegal to ask if I could get a loan to buy a used car and pay it off with the refunds. She didn't know. Is there a way to get around the recent loan before bk in this situation??

Sorry this is a multi question problem. My brain is so fuzzy now from reading everything I can get my hands on about bk....and now the situation with my Mom. I am so overwhelmed. (As we all are.)

Btw, we do have a house that we are going to keep. I think we only have about 7k equity in it. It's the only thing I want to keep.

Can someone shed some light on this for me please? I just don't know what to do.

[SamanthaJones]

Why can't you get any loan anytime prior to filing?

It'd be a loan you intend to repay, nothing wrong with that. Will your new vehicle equity go over the exempt amount for your state? Curious as to what sort of tax return you have that cannot be e-filed?

[toomuch]

It'd be a loan you intend to repay, nothing wrong with that. Will your new vehicle equity go over the exempt amount for your state? Curious as to what sort of tax return you have that cannot be e-filed?

That would not be considered preference????

Because it's 2006, 05 taxes have to be mailed in and cannot be filed electronically.

[SinkingFast]

IF you were current on all bills to this point, AND hadn't started Consulting with attnys, I'd think you'd be safe to finance a vehicle. BUT, you're not current on your payments on 2 cars. AND you've already started Consulting attnys. That says to me, and any other objective person from the outside looking in, that you're in financial trouble and you're seriously thinking about BK.

You have to step outside your situation and look at what you do with another person's eyes. You are living it. The other person is not. When you think about letting the cars go back,.......... Taking a loan and buying another car,........... Then paying off the "new" car loan with income tax refund money,.......... On the eve of filing BK,.......... How does that sound to you??!! Not so good.

You're already on the bubble as far as the Means Test and income goes. That in itself is gonna bring a certain level of scrutiny. Add in this loan activity and your case could potentially be severly scrutinized.

[toomuch]

IF you were current on all bills to this point, AND hadn't started Consulting with attnys, I'd think you'd be safe to finance a vehicle. BUT, you're not current on your payments on 2 cars. AND you've already started Consulting attnys. That says to me, and any other objective person from the outside looking in, that you're in financial trouble and you're seriously thinking about BK.

You have to step outside your situation and look at what you do with another person's eyes. You are living it. The other person is not. When you think about letting the cars go back,.......... Taking a loan and buying another car,........... Then paying off the "new" car loan with income tax refund money,.......... On the eve of filing BK,.......... How does that sound to you??!! Not so good.

You're already on the bubble as far as the Means Test and income goes. That in itself is gonna bring a certain level of scrutiny. Add in this loan activity and your case could potentially be severly scrutinized.

I understand what you are saying. Yes, I am planning bk. I think I will be asked at the 341 meeting when we first knew we had to file bk. I don't even know what to say about that. I've known for a while, but can't very well say that.

As for the car loan, what if I turn in my cars now, in March and when my refunds come back in May, I pay cash for a car then. Would that raise red flags that I could pay cash for a used car?

Hubby just paid cash for a used truck but still has his new one. We know we are going to lose the vehicles. That's why we are focusing on getting good used ones. I thought that was part of the planning.

Sorry to be so thick headed. I am trying my best to do this right, and I do realize it's our fault we are in this mess.

Thanks,

Brenda

[SinkingFast]

I didn't mean to sound rude. It's just we think to do things with the best of intentions, given our own unique circumstances, and don't realize that a 3rd Party can see our actions in a totally different way.

Trustees are not totally insensitive. They realize, if we let our house or a car go back in BK, we do need replacement housing and transportation.

A lot of what might happen with the Trustee is gonna depend on timing. If you get your refund and buy a car one month, then file the next, that could raise an eyebrow with the Trustee.

If you got your refund and caught up payments on your house (paid a Secured Creditor) or paid back due property taxes (a Priority Creditor), there's not a lot the Trustee could say or do. The Trustee is not gonna go back to a Secured or a Priority Creditor to recover your payments to them.

Buying a car can look like your trying to convert non Exempt cash assets into an Exempt vehicle asset. Thereby preventing the Trustee from recovering something from you "for the benefit of your Creditors".

Can you possibly wait a while longer to file after getting the 2nd car??!!

Also, forgot to say, I'm sorry to hear about your Mother. I do hope you are able to be a great source of help and comfort to her.

[toomuch]

I didn't mean to sound rude. It's just we think to do things with the best of intentions, given our own unique circumstances, and don't realize that a 3rd Party can see our actions in a totally different way.

Trustees are not totally insensitive. They realize, if we let our house or a car go back in BK, we do need replacement housing and transportation.

A lot of what might happen with the Trustee is gonna depend on timing. If you get your refund and buy a car one month, then file the next, that could raise an eyebrow with the Trustee.

If you got your refund and caught up payments on your house (paid a Secured Creditor) or paid back due property taxes (a Priority Creditor), there's not a lot the Trustee could say or do. The Trustee is not gonna go back to a Secured or a Priority Creditor to recover your payments to them.

Buying a car can look like your trying to convert non Exempt cash assets into an Exempt vehicle asset. Thereby preventing the Trustee from recovering something from you "for the benefit of your Creditors".

Can you possibly wait a while longer to file after getting the 2nd car??!!

Also, forgot to say, I'm sorry to hear about your Mother. I do hope you are able to be a great source of help and comfort to her.

No, Sinking....I didn't think you were being rude at all. I don't want things sugar coated. I have much respect for you and the others on this board.

I just don't know what to do. I don't want to quit paying my mortgage and then use the refunds to catch that up. I'd like to remain in good standing with someone at least.

We have 4 paydays a month. 2 are for the mortgage, 1 -1/2 for utilities, gas, necessary expenses such as car insurance, meds (we do mail order and it's $390 every 3 months), plus otc meds. We don't eat out. My husband probably does but I don't.

I know some would think, well, the house payment is too much. It's 1244. a month. You can barely rent a house for that around here.

Hubby has already been served by the sheriff, a few days ago. So I guess it's a matter of a couple of months before they can garnish his wages. That's why I was wanting to file as soon as I buy a car.

I've spoken with 3 attorneys and several paralegals. I'm not getting much info. Back in September the lawyer told me to "stop paying all credit cards....stop charging.......if you are upsidedown on your vehicles, let them go back and buy a used one." So I haven't paid on any cc since September. I have been trying to keep the cars down to only being 2 months behind.

I just want to keep my house and 2 dependable vehicles. I don't know what will happen if we continue to wait to file. Sure we can wait, but in the meantime, we are going to be served by everyone we owe anything to.

Again, sorry I seem so out of it. I really am dealing with much more than finances. On top of that and my Mom (thank you for your comforting words regarding her), I have a cat who has not eaten for 4 days and I'm having to decide whether to put him to sleep or keep force feeding him. I am an emotional wreck. So thanks for letting me vent and thanks for the continuing support.

TooMuch

[CindyLou]

There is NOTHING wrong or illegal about bankruptcy planning. Converting non-exempt property into exempt property for the purposes of maintaining your life would not be a problem!!!! As stated by previous poster, be sure you check the exemptions for cars in your state and make sure your purchase does not put you over that amount. FYI...I filed my 05 and 04 taxes at the same time and I got my 04 in th email in around 4 weeks.

[SamanthaJones]

You don't get garnished by being served a lawsuit. You get garnished after the lawsuit process, if you lose, and if you don't pay the judgment, and then only if the creditor then files for the garnishment.