Keeping cars

[downwardspiral]

I'm still a little confused on whether or not we will get to keep our cars when we file. Not sure if it will be a Ch 7 or 13, the credit counseling place said probably a Ch. 13 due to disposable income.

Anyway, we got our cars in January. We have no equity in them. We are current on our payments. They are not luxury cars, one is a Nissan Versa, the other a Crysler Pacifica.

Someone told me you can only keep a car that is worth 2500 and that they will make me turn in my cars and buy a car at that price. Which seems crazy. What car costs 2500? Another person said she had a fancy Cadallic and she was allowed to keep it and she filed Ch 7

Can anyone help me understand?

[Cali]

Our attorney told us we were allowed to keep our vehicles if we wanted to. We have an '05 and '06 Lincoln.

[AMISLANDER]

Depending on your state & whether you own your car, they may let you keep it but if there's over the amount of equity, they make you pay the difference to keep it.

[woeisme]

If you just bought your cars and have little to no equity in them, then yes, you can keep them if they aren't luxury cars that have monthly payments that are above the allowable amount in your state. I think our 1st car could have cost ~$350/month, second $220 or something like that (didn't pay too much attention since we owned both our cars so no payments). So you might want to check into what the standard allowances for car payments are in your locality and compare them to what you are currently paying. If your payments are a lot more than the trustee will allow in your CH 13 plan, you might have to juggle funds from some other area of your budget that you spend less than the standards allow.

[Cali]

Ok now I am confused. Our vehicles would be considered luxury and the payments are higher than what is allowed here. But our attorney said we could file C7 and keep the cars if we wanted to.

If you just bought your cars and have little to no equity in them, then yes, you can keep them if they aren't luxury cars that have monthly payments that are above the allowable amount in your state. I think our 1st car could have cost ~$350/month, second $220 or something like that (didn't pay too much attention since we owned both our cars so no payments). So you might want to check into what the standard allowances for car payments are in your locality and compare them to what you are currently paying. If your payments are a lot more than the trustee will allow in your CH 13 plan, you might have to juggle funds from some other area of your budget that you spend less than the standards allow.

[woeisme]

Chapter 7 would allow you to keep your cars as long as you didn't have non-exempt equity in them. It's in CH 13 that you need to make sure the payments are at what is allowed or lower since this is money that the trustee thinks should go to your other creditors, not to a car payment.

I looked up the car allowance amounts on the IRS website because I was thinking I might be remembering too low, and I was. The national standards for ownership cost for 1 car is listed as $489, for 2 cars is $978. It's the operating costs that were the much lower value I was thinking of, since this is what we had to list since we owned our beater cars outright (and weren't smart enough to buy newer cars before filing). For operating costs, it's $186 for the 1st car and $372 total for 2 cars, which we petitioned to allow to be higher due to my husbands long commute to work and the fact that our cars are so old so maintanence is high on them.