Help! Do we buy this car or not? Filing in about four months

[ssmdem]

I need advice. I'm so scared to make a move right now. We're filing in about four months and hoping for Chap 7. Our income should be below the median at that point, so I'm pretty certain we'll be able to go that route. We have one car that's fine - no issues, only worth about $3K but it runs great, brand new engine. Our other one is worth $4600 - but we have a written estimate from a body shop of $2600 in damages to it. We went car shopping this afternoon - the dealership is offering us $2500 for it as a trade in - so that sounds fair to me - ???? The car we're looking at purchasing is a 2009 model for $23K. The private party value on it shows $22K, retail is $25K, so it's a fair price. We'd be financing $20K. Are we doing the right thing? We love the car, but we just can't think emotionally about this right now - gotta think smart. No - we can't afford the payments ALONG with our credit card payments, but since we are about to stop those along with our mortgage since are letting the house go when we file - we'll be fine and will be reaffirming the car loan. Do we go for it or not? I'm scared to death!

[MSbklawyer]

Would you qualify for Chapter 7 without the car payment?

[ssmdem]

Would you qualify for Chapter 7 without the car payment?

Our income should be below the median income when we file without factoring in any expenses. Am I looking at this right?

[MSbklawyer]

Yeah, I think you're looking at it right. But if you qualify for 7 without the additional car payment, then the question of whether or not to purchase the car is pretty much independent of filing bankruptcy -- though you might be able to get a better interest rate before you file.

But if it's me, I'm hanging on to the cash until I need a car. You're going to need money for atty fees, filing fees, credit counseling fees &c. Right now you don't need a car. You want one.

[ssmdem]

Yeah, I think you're looking at it right. But if you qualify for 7 without the additional car payment, then the question of whether or not to purchase the car is pretty much independent of filing bankruptcy -- though you might be able to get a better interest rate before you file.

But if it's me, I'm hanging on to the cash until I need a car. You're going to need money for atty fees, filing fees, credit counseling fees &c. Right now you don't need a car. You want one.

The better interest rate is EXACTLY why I want to buy it now. You're right - we don't need one now. Although within the next year, we will - it's starting to mess up, need repairs, etc., so we're looking at probably about a year left on it before it becomes a major expense.

Attorney and filing fees we'll have by missing the first house payment - I can't believe we ever took on this monstrous mortgage!! - We're current on all bills right now but next month will be stopping them as we know bankruptcy is inevitable. We're just buying time right now until my previous income drops off our six month range, as well as a bonus my husband received.

I guess what I'm most looking at is that our attorney cautioned us about making sure we didn't significantly reduce our current asset amount on our vehicles by trading and buying new ones. We've currently got a total of $7600 between both vehicles. This will reduce our asset amount down to about $5K, but hoping with the documentation from the body shop of how much damage is on our current vehicle, that will help the trustee look more favorably on the transaction. Maybe I'm thinking too much about all of this Just trying to make sure we do all of this right and don't raise any red flags anywhere.

[MSbklawyer]

The better interest rate is EXACTLY why I want to buy it now. You're right - we don't need one now. Although within the next year, we will - it's starting to mess up, need repairs, etc., so we're looking at probably about a year left on it before it becomes a major expense.

Attorney and filing fees we'll have by missing the first house payment - I can't believe we ever took on this monstrous mortgage!! - We're current on all bills right now but next month will be stopping them as we know bankruptcy is inevitable. We're just buying time right now until my previous income drops off our six month range, as well as a bonus my husband received.

I guess what I'm most looking at is that our attorney cautioned us about making sure we didn't significantly reduce our current asset amount on our vehicles by trading and buying new ones. We've currently got a total of $7600 between both vehicles. This will reduce our asset amount down to about $5K, but hoping with the documentation from the body shop of how much damage is on our current vehicle, that will help the trustee look more favorably on the transaction. Maybe I'm thinking too much about all of this Just trying to make sure we do all of this right and don't raise any red flags anywhere.

Why are you missing a house payment? If you're skipping a house payment and buying a car, you're on the wrong road. Unless I'm missing something.

[ssmdem]

Why are you missing a house payment? If you're skipping a house payment and buying a car, you're on the wrong road. Unless I'm missing something.

The house we've decided to let foreclose when we do the bankruptcy. We're $65K upside down on the loan. The house payment is way more than we can afford without my job. Honestly, it was more than we should have done even WITH my income, but since that has been lost, it's just not possible. If we weren't upside down on the loan, we'd sell it in a heartbeat - would have sold it two years ago - but we were upside down even then - we just kept hoping the market would turn around. Then when I lost my job, that was pretty much the final straw.

I'm not trying to justify the car purchase - I really am trying to figure out if we should do this or not. We can find the cash to repair the current car and keep driving it - I'm not above that. But there's still the fact that it's only going to get more and more expensive to maintain in the next couple of years. And at that point, the interest rates for a car then are going to be awful for us.

Losing our home is inevitable. It's going to happen. Even if I miraculously get a job making what I was making, we're still upside down on the property by a significant amount. Our credit card debt can never be repayed at the rate we're going. Trust me - we've made all the mistakes, I'm not blaming anyone. Just trying to not make anymore at this point.

[MSbklawyer]

Ok, I was missing something -- you're surrendering the house.

Well, the question of whether or not to buy the car doesn't seem to be a factor in your bankruptcy if you are going to be below median when you file.

Just be careful that you don't fall into the same trap with the car that you did with the house -- buying more than you can afford. Champagne taste and beer budget and all of that.

[ssmdem]

Ok, I was missing something -- you're surrendering the house.

Well, the question of whether or not to buy the car doesn't seem to be a factor in your bankruptcy if you are going to be below median when you file.

Just be careful that you don't fall into the same trap with the car that you did with the house -- buying more than you can afford. Champagne taste and beer budget and all of that.

I hear ya! I told my husband just that tonight. I told him I was done making mistakes!! We're buying a car that we can afford - these payments will be lower than either of the last two car payments we had over the past ten years - so it's meeting that requirement. And we tend to keep cars forever - the ones we have right now are 8 and 9 years old - so hopefully this one will last us until the bankruptcy is ALMOST off our record.

I guess worst case scenario, the trustee balks at us transferring about $2K in non-exempt assets. I'm pretty sure we're already going to be an asset case anyway due to a $1100 payment I paid to my mother in December before all of this happened. So, we're preparing for the worst and hoping for the best. I keep thinking "big picture, girl - look at the debt you're discharging - quit worrying about the bumps along the way." Been pinching pennies for so long trying to pay these bills that it's hard to not try to keep every little penny out of the trustee's hands though.