Read the guide, still doesn't asnswer my Q.

[broderp]

I read the awesome guide listed here. I went thru it all of today since this morning at 8am (it's not 4:30).

It address so many issues except mine.

My girlfriend and I (AKA my spouse, but we have never been married) boought a house 8 years ago. We are both on the morgage paperwork as CO-OWNERS.

I pay the morgage from my checking account, have never missed a payment, and she gives me 1/2 each month.

Our finances, except the co-owning of the house ,are separate.

The concern is the atorney is teller her that she can keep the house AS IS and keep her car payment AS IS pay them back 100% like normal and get rid of the unsecured CC debt.

I can only assume this is a chapter 7, as 13 will force her to repay the CC debt, and 7 will allow her to "bargain" with the bills she wishes to keep or repay.

The car I can understand, it's all in her name. The house is a different story, how can the courts or some moderator or attorney change the terms of an agreement I signed and am NOT a part of the bankruptcy agreement?

They can't ruin my credit can they?

[StaciMM]

In a chapter 7, you generally keep secured debts as long as the payments stay current. The only time it would be an issue is if there is more equity than your state allows. Perhaps you should investigate how much equity your state permits? I'm guessing she would claim ownership of 1/2 the equity...

[HHM]

They aren't changing anything. She is half responsible for the mortgage note, if she defaults, then you become fully responsible (or I should say, the bank will look to you to make the payments in full).

Basically, the attorney is just saying, if you stay current on the payments, the mortgage lending company cannot take your house. The other issue is whether the trustee can take the home, probably not.

The other thing you ought to look into is if your state has a common-law marriage provision. Even if its doesn't, your contribution to the expenses becomes a factor in her bankruptcy as to whether she qualifies for a chapter 7 under the disposible income test.

[broderp]

So she and the morgage company (and car dealer) reaffirm the house and car.

Based on what I read, why can't she file and NOT pay the car and keep it, as long as she has less than the $1000 Ohio equity in the car. Or if she has say $2000 equity in the car, pay $1000 to the creditor and and keep the car?

Or does the fact the car is a "secure debt" like a morgage disqualify it?

The car is a 2002 Toyota ECHO wich she bought for around $14K, about 10 months ago, the same cost a NEW 2005 would have cost!

I'm not trying to rip anyone off, just "planning the best possible bankruptcy" for my girlfriend. She feels bad as it is stiffing all these creditors.

[broderp]

The other thing you ought to look into is if your state has a common-law marriage provision. Even if its doesn't, your contribution to the expenses becomes a factor in her bankruptcy as to whether she qualifies for a chapter 7 under the disposible income test.

I will indeed check into the common-law marriage provision, I don't think Ohio has one though.

As I see it, my income or "contribution" would only help her case, as I am litterally paycheck to paycheck. Disposable income? WHATS THAT? Haven't had that in......well I've never had that. If they throw me into it I may wind up having to file myself, and do they really want TWO people filing or one? If it comes to that, I will definately plann ahead and possibly do a CHAPTER 20. I'd rather pay my bills like I am and have them leave me alone...

[StaciMM]

In Chapter 7, she has options regarding a secured debt like a car: reaffirm (sign a paper to accept responsibility for the payments after bankruptcy), surrender it, or redeem it (pay the lender before discharge what they would be likely to get for selling it if you surrendered it to them). If she surrenders it, they can't pursue her for any balance because of the discharge. I *think* they can't take the vehicle back until after discharge, unless they get the court's permission to do so sooner. If I am right, and she doesn't want to keep it after the BK, she could stop making payments now and perhaps save for another vehicle? (Of course-that is something she should discuss w/ her attorney.)

You can't keep something that you haven't finished paying for. More than likely, she owes alot more now than what the vehicle is worth. I looked up 2002 Echo's at Kelly Blue Book, but I don't know that I chose the right one, and came up with $6175 trade in value for a vehicle in good condition with fairly low miles. Depending on her model, the miles, and condition it may be worth a little more or a little less.

Of course, getting a redemption loan isn't too simple-there are companies that do them (search for 722 Redemption loan). You pay higher APR, but on a lot less balance. Also, attorneys charge extra for handling re-affirmation or redemptions. (The companies that issue redemption loans generally finance the attorney fee as well.)


Edited to add: when I changed the values to higher miles & fair condition, the value dropped to $3850. I ran #s for a 4door w/ 5speed. Automatic would add a few bucks to the value, and there is also a 2door version which runs a little lower in value. I added no extra features, and used my zip code of course!

So she and the morgage company (and car dealer) reaffirm the house and car.

Based on what I read, why can't she file and NOT pay the car and keep it, as long as she has less than the $1000 Ohio equity in the car. Or if she has say $2000 equity in the car, pay $1000 to the creditor and and keep the car?

Or does the fact the car is a "secure debt" like a morgage disqualify it?

The car is a 2002 Toyota ECHO wich she bought for around $14K, about 10 months ago, the same cost a NEW 2005 would have cost!

I'm not trying to rip anyone off, just "planning the best possible bankruptcy" for my girlfriend. She feels bad as it is stiffing all these creditors.

[broderp]

StaciMM,

Thanks, that clears it up quite a bit.

I too went to Kelly Blue Book and NADA as well as Edmunds and they each have vastly DIFFERENT ideas as to what the car is worth in it's current condition. DO they (the court or bank who has car loan) use the trade-in, private party or retail figure if she were to redeem the car?

The difference is between $5473 and $9980, depending apon which value and which book I use. If the figure is closer to 10K, then she may as well keep it, and use it to build her credit for the next 4 1/2 years she has the loan for.

She PAID 14K for the car a year ago. owes probbaly 12K still.

I may be able to get a loan to pay a $5-6K car off, but not a 9-10K.

[StaciMM]

I believe that is what gets argued/negotiated w/ the lender and why attorneys charge extra for it. Right now, all my 'info' is research based, not 'been there-done that'. We're filing soon (just have to error check my paper work, print, sign, and mail!) and I understand if you're going to redeem it has to be completed before discharge. I've tried talking to my vehicle lenders-their answer is call after you have filed...

I think NADA is more dealer friendly, while KBB is more consumer friendly. In other words, the dealers will give you KBB value on a trade-if you're lucky-but then sell it for NADA values. So in my opinion, if they were to get the car back tomorrow, the lender would NOT get NADA values for it-most tend to sell at auction to dealers, and they buy low to sell high.

StaciMM,

Thanks, that clears it up quite a bit.

I too went to Kelly Blue Book and NADA as well as Edmunds and they each have vastly DIFFERENT ideas as to what the car is worth in it's current condition. DO they (the court or bank who has car loan) use the trade-in, private party or retail figure if she were to redeem the car?

The difference is between $5473 and $9980, depending apon which value and which book I use. If the figure is closer to 10K, then she may as well keep it, and use it to build her credit for the next 4 1/2 years she has the loan for.

She PAID 14K for the car a year ago. owes probbaly 12K still.

I may be able to get a loan to pay a $5-6K car off, but not a 9-10K.