newbie taking the first steps

[tenchi]

Hello everyone. I just wanted to say how helpful this forum has been. After reading through many of the threads here, I have taken the first step into filing. I have a consultation appointment with an attorney tomorrow morning. So for everyone of you that have posted encouraging notes and useful information. Thank you from the bottom of my heart. You've saved my life because I have even contemplated suicide before finding this forum of kindred spirits. I know now I'm not alone, and I'm not a complete failure.

I do have a question I would like to ask. My wife is currently a student and we live in a two bedroom apartment with my 2 year old daughter. The only thing of any value we own is our single car which we paid off a year ago. It is our only means of transportation. All of the debt is in my name alone so I am planning on filing for myself, leaving my wife out of the proceedings. The only thing I truly worry about is if our car can be taken from us and sold? Thank you in advance.

[SinkingFast]

The car is totally gonna depend on your allowable exemptions. That's State by State in most cases. Some States do allow you to choose to use Federal Exemptions.

What State and tell us about the car. We'll see what we can figure out for you.

May be you'll be covered by your State's exemptions.

May be, the Trustee will "negotiate" an amount he/she will be satisfied with and allow you to buy back the portion you were unable to exempt.

There's lots of possiblities.

[no_it_all]

The only thing I truly worry about is if our car can be taken from us and sold? Thank you in advance.

If you have too much equity in your car for the BK, sell it and go into debt on a newer one. Hit up one of those "we tote the note" used car dealers if your credit is already in the tank. Why? if you have over a certain threshold of equity in the car, the BK court will probably take it, sell it, and pay off some of your other debts. I think I see a Subaru WRX STi in your future! BUT if you really, really want to keep the car you have, you should try and get a credit union or similar to loan you some $$ and give them the title for security. Might be hard if your credit is already in the tank....What kind of car do you have?? Are you considering Chapter 7 or 13???

[SinkingFast]

If you have too much equity in your car for the BK, sell it and go into debt on a newer one. Hit up one of those "we tote the note" used car dealers if your credit is already in the tank. Why? if you have over a certain threshold of equity in the car, the BK court will probably take it, sell it, and pay off some of your other debts. I think I see a Subaru WRX STi in your future! BUT if you really, really want to keep the car you have, you should try and get a credit union or similar to loan you some $$ and give them the title for security. Might be hard if your credit is already in the tank....What kind of car do you have?? Are you considering Chapter 7 or 13???

Comments like that clearly show you do not belong here no_it_nothing!

If they sell/trade the car and take on debt for another vehicle shortly before filing BK, the Trustee can cry Fraud.

If they go and take on a loan against the current vehicle shortly before filing BK, the Trustee can cry Fraud.

You obviously are not a smart as you give yourself credit for.

Oh wait??!! Do you even have Credit??!!

[no_it_all]

Then it sounds like he better put off his filing for 90 days!! BTW, this is called "Pre-Bankruptcy Planning" and involves converting non-exempt assests to exempt assests. Per ED FLYNN Executive Office for United States Trustees:

In this article we extend this approach to a sample of 1,938 recently closed chapter 7 no asset cases. The sample includes cases from all judicial districts except for those in North Carolina and Alabama. We applied the various provisions proposed in S. 625 and H.R. 833 to see how many current chapter 7 debtors would be ineligible for chapter 7. Out of our entire sample we found only two cases where the debtor, with careful pre-bankruptcy planning and a rather broad interpretation of the proposed means testing provisions, could not remain eligible for chapter 7.

So, to suggest that Pre-Bankruptcy planning is illegal is of course, wrong again!

[tenchi]

I live in PA and the car is a 2001 subaru outback sport wagon. It's in fairly decent shape and has approximately 75000 miles on it.

[SinkingFast]

Then it sounds like he better put off his filing for 90 days!! BTW, this is called "Pre-Bankruptcy Planning" and involves converting non-exempt assests to exempt assests. Per ED FLYNN Executive Office for United States Trustees:

In this article we extend this approach to a sample of 1,938 recently closed chapter 7 no asset cases. The sample includes cases from all judicial districts except for those in North Carolina and Alabama. We applied the various provisions proposed in S. 625 and H.R. 833 to see how many current chapter 7 debtors would be ineligible for chapter 7. Out of our entire sample we found only two cases where the debtor, with careful pre-bankruptcy planning and a rather broad interpretation of the proposed means testing provisions, could not remain eligible for chapter 7.

So, to suggest that Pre-Bankruptcy planning is illegal is of course, wrong again!

No one ever said planning is illegal. But there are things that are illegal and there are things that the Court can construe as fraudulent. A cash out refi on a vehicle 90 days before filing BK could be considered fraudulent.

The look back period on property is ONE YEAR!!

We wanted to keep our truck. We needed to pay the IRS $8K in income taxes for 2005. We asked our attny, back in January, if we could do a cash out refi on the truck to get the money to pay the taxes. The attny said NO. A cash out refi "on the eve of filing BK would look fraudulent to the Court."

Should anyone reading this post believe you or the advise of an attny??!!

[SinkingFast]

I live in PA and the car is a 2001 subaru outback sport wagon. It's in fairly decent shape and has approximately 75000 miles on it.

You can go to Kelly Blue Book or Edmunds.com to get a value on the vehicle. I looked and didn't find a "sport" wagon listed at Edmunds. But base value was between $9K trade in and $11K-$12K retail. Generally vehicles are figured on Private Party pricing scale. You'll have to factor in mileage, overall condition, if some mechanical or cosmetic repairs are needed, and the cost of the repairs, etc.

On the upside, PA residents can choose to use Federal Exemptions which gives you a couple of Wild Cards. $925 on any property and $8725 of unused Homestead Exemption to apply any way you want. So it looks like you could potentially protect your car without a problem.

Here's a link for you to the Federal Exemptions:

http://www.pennsylvania-bankruptcy.com/fed.html

[FoolAndHisMoney]

Then it sounds like he better put off his filing for 90 days!! BTW, this is called "Pre-Bankruptcy Planning" and involves converting non-exempt assests to exempt assests. Per ED FLYNN Executive Office for United States Trustees:

In this article we extend this approach to a sample of 1,938 recently closed chapter 7 no asset cases. The sample includes cases from all judicial districts except for those in North Carolina and Alabama. We applied the various provisions proposed in S. 625 and H.R. 833 to see how many current chapter 7 debtors would be ineligible for chapter 7. Out of our entire sample we found only two cases where the debtor, with careful pre-bankruptcy planning and a rather broad interpretation of the proposed means testing provisions, could not remain eligible for chapter 7.

So, to suggest that Pre-Bankruptcy planning is illegal is of course, wrong again!

While the courts do allow certain pre-bankruptcy planning it does have to be within reason. If it's not reasonable then it wouldn't be fraud, but it would be considered a bad faith filing and that would be followed by your case being dismissed. You can get rid of "extra" non-exempt cash you have by spending it on reasonable & necessary items such as repairs, heating fuel, tools of the trade, etc. If you run out and buy a new car just before filing you better have a good reason for doing this such as proof that your old one died and is beyond economical repair.

[FoolAndHisMoney]

No one ever said planning is illegal. But there are things that are illegal and there are things that the Court can construe as fraudulent. A cash out refi on a vehicle 90 days before filing BK could be considered fraudulent.

The look back period on property is ONE YEAR!!

We wanted to keep our truck. We needed to pay the IRS $8K in income taxes for 2005. We asked our attny, back in January, if we could do a cash out refi on the truck to get the money to pay the taxes. The attny said NO. A cash out refi "on the eve of filing BK would look fraudulent to the Court."

Should anyone reading this post believe you or the advise of an attny??!!

Actually it's now 2 years. Any cars transferred within 2 years before filing you better be prepared explain why it was transferred and where the money went, if any that you received for it. It doesn't mean it's fraud, just means you need to explain why it was transferred. A parent can give their 17 year old a car 21months before filing with no intention of filing at that time. They just need to explain this when asked.

[SinkingFast]

I knew there was a 2 year deal in there somewhere, but knew the 1 year was a for sure.

Thanks for the clarification, FAHM.

I have 2 of those to explain. We traded about a year ago. A bomb that you could not depend on to get you to the grocery store for a newer truck. Then we had to sell the truck to pay the income taxes. I'm sure we're gonna be real popular with the Trustee when he sees assets have disappeared that he can't sink his filthy paws into. But not much he can do. We paid a secured Creditor and a Priority Creditor with the proceeds. While the Trustee may give Chrysler Financial some grief, the Trustee certainly isn't going up against the IRS over the income taxes owed.

Oh, and just a tidbit of info on vehicle registrations. The attny said when we moved into the new state, if we had simply added each kids' name to their car on the title and registration, in addition to our names, as co-owners, those 2 vehicles wouldn't even be a consideration in the BK. Something to do with a non filer owner and us not owning in entirety. Didn't make a difference to us at that point. We'd already gotten the new registrations the old way. In our names of course.

[no_it_all]

We needed to pay the IRS $8K in income taxes for 2005. We asked our attny, back in January, if we could do a cash out refi on the truck to get the money to pay the taxes. The attny said NO. A cash out refi "on the eve of filing BK would look fraudulent to the Court."

Then we had to sell the truck to pay the income taxes.

Can somebody decipher this?? Anyone???

[SinkingFast]

Can somebody decipher this?? Anyone???

Why waste the key strokes. You don't listen anyway.

[tenchi]

After speeking to an attorney I retained. He said I should be able to keep the car as an exemtion if it is worth $6000 or less. If it's worth more, there are still ways we can keep the car. What a relief, since our car was the only item of any value we have and the only thing we really wanted to keep.

[SinkingFast]

It's a hassle for the Trustee to sieze property. They have costs to sell. They go quick sale and don't get top dollar. Etc.

Trustees quite often set a dollar figure they are happy with, and offer to let you "Buy Back" the non exempt portion of an asset from the Court.

One person here had a $7000 difference and the Trustee settled for $3000. Attnys have told us the Court will take payments, at 0% interest.

You're very close, so you might not have any problem at all.