How do I determine local district standards?

[Bex]

eddiep thanks--you're probably dead on

bex
I have noticed that several people have posted that they could not do a ride through on the car. Some districts make you either reaffirm the debt or surrender the car. just a heads up

My new car is not dead in the water yet, but I'm really REALLY reluctant to go for a new monthly obligation at this time...having said that, the more I thought about it, the more I believe that there's no way a lender would let me do a ride through having never had a car loan before and only, say, 2-3 months payment history.

So, if the means test is no longer an issue, the only reason to buy is to get a slightly better interest rate buying now vs after discharge.

Anyone have any guesses as to what kind of rates to expect before and after discharge?

Truthfully, I don't think want to pay for as much car as lenders tend to like for security--generally they don't like to lend on anything older than 5-6 yrs and my price range and desired make (range) has me looking at more like the 6-8 year olds. I think the timing is just not quite right and will have to follow my gut (and remain focused on the primary goal here: saving my @$$!!)

Thanks for your input--the whole reaffirmation deal, both home and auto, has given me a lot to think about

[Bex]

Hey I just now read this:

http://www.moranlaw.net/car-ownership.htmGet ownership allowance on the means test

A bk lawyer saying if your car is paid off and you want to be completely assured of the ownership allowance, just create a lien secured by the car (and instructions on how to do so).

And yes, I went "DUH!" Because isn't that the last place destitute folks go for solvency, the family auto?! Totally natural, normal, believable...I like it!

I have an appt for consult on Thursday--will get (more) definitive answer on this car thingy. Oh yah, with the software, it functions like you would expect an allowance to: you deduct your payment from their $489 allowance, then you add the payment again as a liability...well, with cars (unlike houses) no matter how large your monthly obligation, you only get $489 (boo for people with big car debt, but at least it's equitable if you give it to ALL car owners).

Because, based on the wording of the means test form:

if you owe nothing, you get $0
if you owe $50k, you get $489/mo
if you owe $1, you get $489/mo

I'm having a problem seeing where the fairness is between the first and the last! And, I reiterate, you get nearly the same "vehicle operation" as you would for using public transportation--excuse me?!?! When was the last time a commuter paid insurance and taxes and gas and repairs that were equivalent to those of an owned vehicle??!

Anyway, back to the allowance: how is housing different other than wanting to keep the market stable??? My giant house pmt is truly the origin of my debt problems, yet the means test lets me have BOTH the $635 allowance AND the $920 payment against my income...not at all like the car ownership scenario--if it were treated that way, you'd only ever get $635. Of course, I'm sure we don't want to allow bk courts to mandate the value of our homes, but even the *illusion* of parity would be a nice change.

I would be much happier if Congress would just quit this charade that they care atall about their constituents. Just say, "we're screwing you to the wall and here's why" and then ring the bell and we'll start the match!


Last, but not least: I still don't GET the treatment of student loans for means testing. I know they're not dischargeable, but are they still included in your "Total Non-Priority Unsecured Debt" (Line 53, Form 22A)? Or not? They certainly are non-priority unsecured by definition...for MDI calculations, though, I think the payment goes at the end, Part VII: Additional Expense Claims--ridiculous that they have no place in the means testing, but it's not going away, so you can't calculate any kind of disposable income without either including them or expecting the filer to default.

This is so painful as I am such a lover of logic... *sigh*

[wipetheslate]

Your auto loan will be discharged with your bankruptcy case. You will be able to reaffirm the loan in the bk but it's generally suggested not to reaffirm. What you will do is referred to as a "ride through" which means you let the debt be written off but continue to make timely payments to the lender. So long as you are paying them they won't repo the car.

If you ever need to stop paying the loan you can simply walk away from the vehicle regardless of condition, mileage or anything else. You would owe nothing.

To go the new car route, it sounds like keeping your old car would be a prudent move. I just read something tonight about someone being totally up to date on payments but still getting their car repo'd because the debt wasn't formally reaffirmed. I definitely wouldn't want to end up carless!

[wipetheslate]

wipetheslate

are you considering filing pro se? I just wanted to let you know that you could ask these district specific question (not that I don't want you posting questions here )
but you could have an initial consultation with an attorney usually for free and pick his brain without retaining him.

I'm thinking about doing that. I don't mind paying someone $500 or so who knows what trustees routinely do and do not accept in Hawaii. I just don't want to go thousand of dollars more in debt.

I'm a researcher by profession, so I feel pretty equipped to deal with a pro se filing.

[wipetheslate]

Oh yah, sorry about hijacking your thread

Ha, ha. No worries. I did discover that the IRS allows $200 additional for operating expenses when a car is owned free and clear and is 6 or more years old with 75K or more mileage.

Some places will give you the ownership expense. If they don't you should, at a minimum, get the extra $200 for operating expenses. You just have to be sure to put it in the correct spot on the means test.

[eddiep]

wipetheslate

are you considering filing pro se? I just wanted to let you know that you could ask these district specific question (not that I don't want you posting questions here )
but you could have an initial consultation with an attorney usually for free and pick his brain without retaining him.

[eddiep]

bex
I have noticed that several people have posted that they could not do a ride through on the car. Some districts make you either reaffirm the debt or surrender the car. just a heads up

[Bex]

Thanks! And article on ownership allowance:

Oh wow, that makes perfect sense--so the discharge releases the borrower from the contract, but if paying as agreed, the loan is as good a risk as it ever was, so a repo only works against the lender's interest...they can't MAKE anyone enter into a new contract against their will, so they do nothing. Wow. Nice.

And I think the vehicle ownership allowance is close to a given on the paid-off car, too, as I posted earlier, that Best Case software fills the $489 in automatically (oops but I only checked my district) AND I just read this (dated 6/15/2009):





So ...now that I don't think this is a means test issue (hoping to see atty this week--depends on some things at work)--all is left is a fairly win/win kind of decision. Having choices feels really nice--is this what life was like before I became a bond slave for credit card companies??!?

In an attempt to stop hijacking here, I'm putting the rest of what I responded in its own thread...

[OhioFiler]

...so I take on new auto debt, file/discharge/close and then something catastrophic happens and I can't make the payment? So the car goes back to the lender and they want to sue me for the gap between the remainder of the loan and the combination of what I've already paid and the resale value of the vehicle? Is that what a deficiency judgment is?

Your auto loan will be discharged with your bankruptcy case. You will be able to reaffirm the loan in the bk but it's generally suggested not to reaffirm. What you will do is referred to as a "ride through" which means you let the debt be written off but continue to make timely payments to the lender. So long as you are paying them they won't repo the car.

If you ever need to stop paying the loan you can simply walk away from the vehicle regardless of condition, mileage or anything else. You would owe nothing.

[Bex]

Hey Slate! II

Oh yah, sorry about hijacking your thread

[Bex]

Hey Slate!

I downloaded a trial of that "Best Case" bankruptcy software and ran the 22c with both my old car and a new one.

It automatically filled in the full $489 ownership standard on the paid-off vehicle, so that must be fairly common...I will let you know if I find anything further.

Oh, the other thing it did for me was show me that I was not including my student loan debt in "total non-priority, unsecured debt" which changes the picture a bit, too.

If nothing else, this process has shown me how ignorant and weird I am about money--I guess since I've always known my student loans (some subsidized, some not) were not dischargable, I just put them out of my mind after I refi'd them to 4.25% interest many moons ago. DUH. I kept wondering "how do these people even manage to get INTO these giant sums of debt--I can't even live with my paltry $13k!" Um, yah, that's $30k, not $13k!!! Still probably modest, compared to a lot of folks, but it ain't chump change, that's for sure.

[Bex]

Did you double check to make sure your new car payments will be reported to all of the credit bureaus in the after-BK strategy as you rebuild the lousy after BK credit? Should you consider the pros and cons of re-affirming a car loan? if something should change, like deficiency judgments after BK if one cannot make the payment?

Hmm...okay, I'm a newb here, and new to a lot of financial concepts, too, so please forgive me...so you're asking what if I file bk with a new car--and I should clarify that the type of vehicle I have in mind would be "new to me" as I would never buy a brand new vehicle for the depreciation hit (I do know that much from having been raised by a CPA!!)

...so I take on new auto debt, file/discharge/close and then something catastrophic happens and I can't make the payment? So the car goes back to the lender and they want to sue me for the gap between the remainder of the loan and the combination of what I've already paid and the resale value of the vehicle? Is that what a deficiency judgment is?

If so, thanks for the heads up--as I said a while back, I've never carried a car note before, so I didn't know they did that (tho it makes perfect sense). And it's a valid consideration, but I'm thinking the risk will be minimal on a used car (less depreciation) for which I'm planning to pay ~$200/mo AFTER discharge of $500/mo in cc and medical bills.

But I do plan to talk this over with both my CPA (DAD!) and atty--I reallyreallyreally want to do all this right and don't want to get suddenly blinded by car lust where previously there was none! I had planned to save cash to pay for this car, but the time has ticked by and the nefarious cc companies now have it all!

I don't HAVE to have a new car right this minute, my Corolla is still running like a champ, but at 15 yrs of age and 120k mi, I have to at least come up with a plan.

As to reporting to the bureaus or not--truthfully, I care not! I have used my last credit card for this lifetime and this hypothetical car loan will be the last consumer debt I incur. I already have a teensy bit of equity in my home (not up to the state bk exemption, alas!) so by the time I'm ready to sell, my equity and income will talk loudly enough to overcome any underwriter's qualms.

If I have the wrong end of the stick on any of this, please do not hesitate to educate me--I very much appreciate your time and expertise!

[Bex]

We made the decision to file BK in February and purchased a new car to replace my wife's 10 year old car. We got a great rate as our credit scores were still good at that point. Now we have a dependable car for her to drive for several years.

This is a common pre-BK strategy.

This is great info, thx! So how long before you filed was the car financed? Or does it even matter when your looking at a commuter type vehicle--just standard family transportation?

What I would like to do, since I can only have one exempt car, is buy a car for me and keep my oldie olderson and sell it to my 16 yr old son--this scenario was my plan all along before I dug my head out of my lower alimentary canal to notice that there is no way I can swing it when I'm in the hole $200/mo already...so, I suppose, rather than transferring the car and raising the red flags --even tho it's a standard "get the kid a junk car so I don't have to keep toting him around to football, school, etc and occasionally miss work" move--no red flag atall if you've ever had or been a teenager.

I guess I could make the sale to him part of the bk?? Even tho the new car would have no equity, which bites.

It only books for $1,500, so I could finance him for 60 months and not change my MDI enough to matter...not that he'd ever pay the full amount--at my strictest, I only wanted to charge him 1/2 book value.

So my question is the timing: obviously, the sooner, the better where financing is concerned--I haven't checked in a while, but I believe my FICO is still in the early 600's, but won't be before too many more reporting cycles go by! But I may be a little bit on the line with the means test--it seems less and less the more I read, but still want very much to avoid the appearance of impropriety...I could buy the car and wait to file for 90 days...maybe could keep my head above water 180--no way we'll make another year.

Sorry so verbose and thanks so much for the response--there is sooooo much to learn and I've never been blessed with a mind for finance. Heh, I just realized how much of a Captain Obvious statement that was, considering the circumstances!!!

[Bandit]

I'm really intrigued by this car buying idea! It can't be considered bad faith when you obviously need a car and the loan wouldn't get discharged anyway--bad faith is buying something you know your not going to be able to afford or know your going to discharge the debt on, right? But in this case, you would be *better* able to afford it after filing...

Did you double check to make sure your new car payments will be reported to all of the credit bureaus in the after-BK strategy as you rebuild the lousy after BK credit? Should you consider the pros and cons of re-affirming a car loan? if something should change, like deficiency judgments after BK if one cannot make the payment?

[OhioFiler]

We made the decision to file BK in February and purchased a new car to replace my wife's 10 year old car. We got a great rate as our credit scores were still good at that point. Now we have a dependable car for her to drive for several years.

This is a common pre-BK strategy.