Owe parent money on car

[Willy13]

One of my parents loaned me money to buy my car a little over 4 years ago but we never drew up any paperwork and never had a lien put on the car. I still owe them about $5000 on the car. Since you have to create a lien at the time of the loan, I was wondering if your parent could sue you in small claims and get a judgment and then have a valid lein for what is owed. I'm still not sure where I stand with property values and exemptions covering everything. Since it's seems to be a bit tricky determining how a trustee will value assets, I am just looking for a way encumber my assets a bit more.

[keepmine]

Doing something like this on the cusp of bk is asking for trouble. For starters, since no paperwork exists, how would your parents prove this to a small claims court judge? Get some legal advice and don't involve others in your financial problems.

[Flamingo]

When your parents loaned you the money for this vehicle, what was the discussion on paying them back? Were you to give them payments as you could, pay them back when you could, pay them back at a later time, etc., etc. In any event, it the amount was "loaned" to you, you owe them the money. You can list them as a creditor if you wish on your bankruptcy filing but personally I would discuss this matter with your attorney and also with your parents before you do something like that. You might just work something out with them that if they still want the money from you that you can pay them back when things are better. Hopefully you have understanding parents that may not need the money right away.

[Willy13]

When your parents loaned you the money for this vehicle, what was the discussion on paying them back?

It was a verbal agreement. I have made payments and have copies of all the cancelled checks. I believe/hope they have a copy of the cancelled check we used to buy the car with. One parent paid some cash for the car also. The main problem is my payments are not regular do to my inconsistant income. I have paid back about 1/3 of what the car cost total. So righfully 2/3's belong to my parents. The one saving grace is the car is co-owed with one of my parents so I believe that makes the car at least a 50/50 split between me and the other parent. It's a weird situation because my parents are separate and they both helped me with the car. Parent 1 loaned me a small amount of the money and is the co-owner. I pay parent 1 the insurance and other household bills since I live with them. Parent 2 loaned me the bulk of the money and has no written claim to the car. This is where it gets confusing. Parent 1 is 50% owner since they are co-owner. Parent 2 I still owe 1/2 what they loaned me. I still owe parent 2 almost as much as my half of what the car is worth KBB so in a sense, I have no equity in the car even though I have paid 1/3 of what the car cost. No matter how you look at it I only paid less than half of what the car is worth and want that to reflect in any BK proceeding if possible. Sorry if this gave anyone a headache reading this. I'm just looking for any way to maximize my exemptions and minimize assets legally and get BK'd as soon as possible. The car thing just bothers me because from what I understand right now creditors and trustees can go after 50% of the car even though 50% is not mine rightfully. If I had only known about the lien process back when I bought the car. Thanks for your help.

[AngelinaCatHub]

This does not sound bad to me. Explain it simply to the lawyer, both parents loaned you money, clear and simple. Just be carful not to make a preferential payment. Let the bk go forward as they are creditors. Let them get paid by the Trustee for whatever they will get. After the dust clears, and the bk is closed, pay both of them. Not a problem. 'Hub

[Willy13]

Just be carful not to make a preferential payment.

I already explained to them that anything I pay them within a year of BK they could be forced to pay back. They know the bind I am in and are OK with me not making any payments until the BK is finished. Thanks

[keepmine]

In your initial post, you said you weren't sure where you stood with exemptions and proerty values. Have you spoken with an attorney?

[Willy13]

In your initial post, you said you weren't sure where you stood with exemptions and proerty values. Have you spoken with an attorney?

No not yet. I know I should probably see one as soon as possible even though I don't plan to file for about a year. I want to let some large balance transfers age, make as many minimum payments as possible and let my car lose a little more value. I have no problem waiting if it helps me get an easier BK. Right now I'm trying to learn as much as I can before I go to my consoltations so I can make the most of them. What really stinks is, I have like one BK attorney that is local and the rest are an hours drive away. I'm not comfortable with phone consultations as I'm not good with just explaining things, I need my paperwork to show them things I can't explain well.

The property value thing that is confusng is determining the car value. Some are OK with Private Party and some go with Used Retail. That is like a $2000 difference in my case and the difference between a no asset and asset case. I would like to get the car value down to a point where it is well within the available exemptions. This is probably the kind of thing I should see an attorney about I know. Right now I just want to get as many suggestions and ideas as I can so I can be well prepared when I see some attorneys. This forum has been a great resource.

[AMISLANDER]

In your state how much vehicle are you allowed to keep? Are you thinking that your car will be seized by trustee?

I went through this but my parent had a lien on car over a year prior to bk. They did not end up taking the vehicle but I ended up paying trustee to keep vehicle as I "owned" it. If you own your vehicle free/clear (even with debt to your two parents and you live in a state (i.e. Florida) you are only allowed $1,000 worth of car, the trustee will either want the car or you will have to pay to keep it....very sticky situation...I went through it....