Car Payment

[marie9150]

I am paying on a car though a friend. My payments are $ 200.00 a month and I should be paid off by November. It is a Mazda. It's the only car that I have. My question is do I have to list my friend as a creditor or can I just list the car. It is a private arrangement as he was helping me out when my car was repossessed in November.

[StartingOver08]

Do you have a promissory note signed by you for payments to the friend for the car?

[marie9150]

yes I do. When I pay him today I will talk to him about this situation. I'm not sure how to proceed. Don't want to get him involved if I don't have to.

[StartingOver08]

You have to list the friend because that is who you make the payments to for the vehicle. Is there a lien filed on the car for the amount of the note when you first purchased?

You might have a complication here because you are making payments to a friend, but the friend has a security interest in your car so that should help you. It won't help if the lien is not recorded. It would have to have been recorded at the time of purchase. Did you purchase this vehicle from your friend or from a third party?

[marie9150]

There's no lien and it is with a friend not a third party. The title is in my name only!

[StartingOver08]

Ok, that means you have an asset that shows free and clear of any lien. Because there is no lien, the trustee may be interested in your vehicle. What you need to do is find out what the vehicle exemption is for BK in your state. Look here if you don't know already: www.legalconsumer.com Look under your state and check all the exemptions allowed.

If your vehicle equity (value) fits in the allowed exemptions, then you will be ok. If not, then the trustee will most likely want your vehicle depending upon how much over the exemption its actual value is at the time of filing.

To determine value each district uses different methods. In my district they want retail NADA value, which is ridiculous but true. Find out from your attorney which valuation method your district uses.

The other issue you may have is the fact that you have been paying the friend monthy $200/mth. This could be considered an insider payment. Insider payments have a one year lookback. The Trustee could, and many would, go after your friend for the total payments made to them within the 12 mth period leading to your filing.

[marie9150]

I just checked and the auto exemption in Delaware is $ 15,000 for work. The blue book value for my car is $ 3,285 in excellent condition. The car is needed for work as where I am there isn't reliable public transportation. I should be ok with this.

[tigergem]

In my district, I was able to use the wholesale value for valuation. Depending upon your district, a lot of times you can use the average of wholesale valuation and resale or (retail) valuation, or even low blue book value if you can cite a lot of wear and tear or or high mileage or unusual damage to the vehicle. Like... does the a/c work? Does the moon roof leak? Does it need 4 new tires and a complete brake job? Is the transmission slipping?

When you purchase a used vehicle in Texas from someone other than a dealer, Texas DMV taxes it once at the time of second hand purchase based on the wholesale value, so this information is readily available to us here and quite valid for use in valuation.