Big no no....automobile transfers 2 months before filing -- now what?

[2Bshinyandnew]

Changing title to vehicles within one year prior to declaring bankruptcy is a major NO NO. It looks very bad & your bankruptcy could be dropped due to the nature of this mistake.

I know, I had a lien on my vehicle (paid off vehicle) due to a bill owed a parent. It was filed over a year prior to the bankruptcy issue. Trustee wanted the vehicle, lien was valid however. I ended up paying to keep vehicle with the IRS tax that the trustee kept.

Due to it being an SUV & gas prices up at the time, I should've given it up...however...hindsight whatever...

Correct this problem immediately; you need to have a good rapport with your attorney as well, otherwise it makes no sense to deal with someone who isn't working for you.

Just to clarify...auto title transfers within 1 year of filing should be OK as long as reasonable consideration ($$) has been recieved in exchange. If someone needs to sell a car they own outright to put food on the table, even within 1 month of filing, they can do so. As long as they received within a certain % of fair value and spent the proceeds on necessities.

[whipster1]

Can you exempt the vehicles? If not, you will have to pay their value to you unsecureds. DO NOT TRANSFER ANYTHING ELSE. It looks bad.

[DSIG]

I think my attorney is reading these threads or something because he provided me with good feedback today.

He advised to 'let it ride'. Even if I undid the transfers the trustee would demand a percentage of my interest in the vehicles. The trustee would do this if he saw value there--transfer or no transfer. He also said that the trustee does not want to take the vehicles; he wants money. The most important thing, he added, is that I listed the vehicles. I asked him if he thinks the trustee would gloss over the disclosure. He said its possible since I am already paying a lot toward my plan. I guess money talks.
The worse scenario is that the case gets dismissed. I'll keep you all updated

[DSIG]

Can you exempt the vehicles? If not, you will have to pay their value to you unsecureds. DO NOT TRANSFER ANYTHING ELSE. It looks bad.

I dont have anything else to transfer...lol. And these vehicles I dont even consider my property but what is done is done. I can probably exempt the vehicle with the lowest bb value. What is the exemption limit for vehicles or does it depend on your state?

[justplaintired]

Just go to blue book and look. If we are talking newer cars with lots of value, I would worry, if we are talking cars with little value, i wouldn't worry. Also if nothing else how soon do you intend to file? Are you in collections already? Reason I ask is perhaps putting as much time as possible between filing and when the titles were transferred might be wise.

[DSIG]

Just go to blue book and look. If we are talking newer cars with lots of value, I would worry, if we are talking cars with little value, i wouldn't worry. Also if nothing else how soon do you intend to file? Are you in collections already? Reason I ask is perhaps putting as much time as possible between filing and when the titles were transferred might be wise.

I've been at collections since Feb with Amex and all my other creditors were current till last month when I decided to file.

I intend to file this week. Here are some stats on the cars:

The 2001 Toyota RAV4 bb value is $7k

I dont know the bb value for the 2004 Mercedes SL500. This sounds like a nice car but its a piece of crap, and I can certainly see the trustee setting his eyes on its value. I dont even know the mileage since I dont drive the car. My husband bought it from the auction for $23k with a flooded engine which was eventually replaced. The title is a salvage title and this vehicle is always at the mechanic. I think the bb value would be grossly mis-stated since the title is salvage.

Is it worth explaining all this to the trustee regarding the market value of this car? Should I take the title in to show that its salvage?

[catleg]

This may be less of an issue since this is a chapter 13 and not a chapter 7.
As long as the sum of payments to unsecureds exceeds the value of the chapter 7 estate, in this case including the value of the transferred property if you wish, then there should really be no grounds for an objection, as long as everything is disclosed properly.

[DSIG]

This may be less of an issue since this is a chapter 13 and not a chapter 7.
As long as the sum of payments to unsecureds exceeds the value of the chapter 7 estate, in this case including the value of the transferred property if you wish, then there should really be no grounds for an objection, as long as everything is disclosed properly.

catleg thanks for the simple summary. It makes sense now..like a light bulb went up. Yes, the sum of payments (once all payments are made) does exceed the ch 7 disclosures...by a hair. I have no real property; the deed to the house has always been in my husband's name.

I can always increase my payments by reducing my 401k contribution. One thing the attorney focused on was my 401k contribution. It is a bit hefty. If the trustee brings it up I'll offer to change the contribution when the enrollement opens up next quarter.

I noticed you are NJ. I also live in NJ. Any tips for NJ filers?

[AMISLANDER]

I've been at collections since Feb with Amex and all my other creditors were current till last month when I decided to file.

I intend to file this week. Here are some stats on the cars:

The 2001 Toyota RAV4 bb value is $7k

I dont know the bb value for the 2004 Mercedes SL500. This sounds like a nice car but its a piece of crap, and I can certainly see the trustee setting his eyes on its value. I dont even know the mileage since I dont drive the car. My husband bought it from the auction for $23k with a flooded engine which was eventually replaced. The title is a salvage title and this vehicle is always at the mechanic. I think the bb value would be grossly mis-stated since the title is salvage.

Is it worth explaining all this to the trustee regarding the market value of this car? Should I take the title in to show that its salvage?

You may need documenation (can use for ex. a Carmax report) on the true value of the vehicle. If you can document enough issues, it won't be worth the trustee's time to deal with it.

[DSIG]

Those were retail values; I just looked up trade-in value and those numbers are much better:

Toyota = 3k fair condition (its got lots of miles)

Mercedes = 15k; fair condition. kbb cant report a value for poor condition and this car could be worth less because of the title. Ill just have to point that out to the trustee and bring in the carfax report, title and kbb documentation

I'll keep you all posted

[StartingOver08]

Remember, each district uses a particular valuation of the vehicles. For example, here in Fl, Southern District, we are required to use the NADA Retail Value. Of course, that is no where near actual value.

In order to get a value that is actual, we have to use an independent vehicle appraisal to fight the NADA valuation as our vehicle exemptions are so small.

Check with your attorney or the paralegal to find out the valuation method your Trustee will use (NADA or KBB or Black Book...whichever one they use). If your exemptions won't cover the equity in your vehicle and you still want to keep it, then get an independent appraisal of the vehicle. (Not expensive, but worth every penny).

[pcn]

Changing title to vehicles within one year prior to declaring bankruptcy is a major NO NO. It looks very bad & your bankruptcy could be dropped due to the nature of this mistake.

I know, I had a lien on my vehicle (paid off vehicle) due to a bill owed a parent. It was filed over a year prior to the bankruptcy issue. Trustee wanted the vehicle, lien was valid however. I ended up paying to keep vehicle with the IRS tax that the trustee kept.

Sorry to be late to the thread, but can you please elaborate on what happened in your situation? You placed a lien on a paid off vehicle before filing, and that was an issue? Thanks for the help.

[catleg]

I noticed you are NJ. I also live in NJ. Any tips for NJ filers?

I think the BK process is more forgiving here since we don't have the ability to shelter large amounts of home equity thru a homestead exemption like FL and TX. I am getting ready to file now, will know more as time goes by.

[AMISLANDER]

Sorry to be late to the thread, but can you please elaborate on what happened in your situation? You placed a lien on a paid off vehicle before filing, and that was an issue? Thanks for the help.

I had a debt owed to a parent & put a lien on my car in the amount of the debt. The trustee challenged the lien. Yes, it was an issue. Being that the trustee could not attach to the vehicle with a lien (which was on the vehicle a year prior to the filing of my bk, trustee tried to fight it; however, lien was valid. They thought the value of the 4Runner was over $10K. The lien was for $5k. I had a carmax report done on the vehicle & the value came out to $5K. The amount of work that needed to be done (catalytic converters with an estimate from Toyota) came out to $3,500+. Trustee ended up keeping my tax return for the year of filing ($1,500) and I paid trustee $1,500 to keep the vehicle. i.e. we "cut" a deal...it was not worth his time to take a vehicle that was now, no longer worth the $10K that he though he would get.

[pcn]

Thanks AMISLANDER. I think we might be in a similar situation: We needed to finish some water damage repair to our home, but can't qualify for any commercial loans. The only real asset we have is my truck, so I got a loan from my parents and added them as a lien holder to the truck, to give them some little security. (Loan was 8k, truck value is 10k Edmund's, 14k NADA) Our atty recommended the idea but I've read conflicting opinions on here regarding this type thing. We will probably file 60 days after making the loan (60 is purely arbitrary, just how it looks like it will turn out).