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Before Bankruptcy

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22

Jan 2011

Before bankruptcy: Don't pay off the car!

Posted by / in Before Bankruptcy / 120 comments

“In bankruptcy, everything is upside down.  Bad is good; good is bad.”  I tell people that all the time. What does that mean?

For the bankruptcy court to approve your bankruptcy, we have to show why you can’t afford to pay.  It’s good for your financial situation to be bad. Things you do to cut expenses to keep paying your debts–they usually come back to bite you.  It’s bad to be good.

Early January 2011, the Supreme Court, in a decision called Ransom, added keeping your junker car to the list of things that make it harder to get your bankruptcy approved.

I want to be really clear on what this means to people like you.  Suppose you could have traded in your old car two years ago on a new one.  But you knew you couldn’t afford the car payment and still pay your credit cards.  So, you kept the old car, and kept trying to pay your credit cards.   According to the Supreme Court, that can make you a bankruptcy abuser.   Good is bad.

If you got that new car–and then realized you couldn’t afford the credit card bills–the Supreme Court makes it much easier to get your bankruptcy approved.  Bad is good.

bankruptcy abuser driving older car

Still driving that old car while you try to pay your debts? The Supreme Court says that makes you a bankruptcy abuser.

The Supreme Court decision explains the car ownership expense in the bankruptcy means test.   In the budget you were assigned by Congress in 2005, you are allowed to claim $496 for your car payment–regardless of what the payment is.    You get twice that for two or more cars.

Most judges agreed that you got that $496 even if the car was paid for.  Their theory was even if you didn’t have a payment today you would need one sooner or later–and the means test is about whether the court will make you keep paying for five more years. (Also the IRS  standards referred to in the law say One Car and Two Cars.  Not One Payment and Two Payments.)

The Supremes disagreed.  You get the $496 as long as there’s even one payment left, but if it’s paid for, you don’t get it. That can make a big difference to a lot of people–having to keep paying the credit cards $496 a month for five more years.  That’s twenty nine thousand dollars!

OK.  So if you are in financial trouble, you now know to come to see me before the car is paid for.  And we’ll file your bankruptcy in a hurry.  That’s easy.

But suppose the car is already paid for.  Now what? That brings is to another Supreme Court decision, called Milavetz v United States.

Congress in 2005, when they wrote this complicated means test into the law,  also made it illegal for me to “advise” you to incur more debt in “contemplation of filing a bankruptcy case.”  Since lawyers are supposed to tell the truth to their clients, the Supremes gave me some wiggle room on that.

Some wiggle room.  I’m allowed to “talk fully and candidly” about incurring more debt.  I’m not allowed to “advise” you to abuse the bankruptcy system. But we can talk about the “legal consequences” of different courses of action.   So?

I’m not allowed to tell you to run up the credit cards just to have a bigger bankruptcy.  (That would be bad advice.  You’re not allowed to do that, anyway, and I never advise someone to do something they are not allowed to do.  They do often pick up on it, too.)

I am allowed to tell you it will be three years after bankruptcy before you can get a car loan at a good interest rate.  If your credit is still good now, and you’ll need a car soon, then I can advise you that now would be a good time.   I’m allowed to “advise” that, because you’re not incurring new debt “in contemplation of filing bankruptcy.”  You’re incurring new debt “in contemplation of” needing a car at a good interest rate.

But suppose your credit is bad already, and your junker car won’t get you through five years.   Am I allowed to tell you that you’re looking at a five year payment plan, driving around for five more years in that junker, unless you finance a car now?  Am I allowed to “talk fully and candidly” with you that?

I never advise anyone to get a car loan when they have bad credit–unless there’s no other way at all to get to work.  But, to be fully candid, I have to talk to you about the “consequences.”

Getting a car while your credit is bad may mean a $500 a month payment for five years on a 2002 Pontiac.  Not getting the car may mean making a $500 a month payment for five years to the bankruptcy court to pay your credit cards.   Which is worse?

Of the two choices, getting the car is better for your credit.  Getting the car means you might be able to get a mortgage loan in less than three years.  Otherwise, you’re talking seven years.

And getting the car means you’re driving that 2002 Pontiac with 70,000 miles, which is at least better than the 97 with 120,000 miles that you’ve got now.

“Candidly,” I have to tell you that you can figure that out for yourself.

Maybe I should stop here.

Some lawyers have told me privately that they think their clients should get a title loan on that older car.

I’d never “advise” getting a title loan.  Title loans mean you get $3000 on your car, and you have to pay $500 per month FOREVER.  That’s never a good idea.    But if we discuss it fully, suppose you could use your tax refund to pay off the title loan after one month.  Then it costs you $500 to borrow $3000 for just one month.  And as a bonus, you avoid having to pay the bankruptcy court for five years.

Any better ideas?  Suppose the junker really needs work, which you can’t afford.  And mom has offered to let you borrow her car for a few months, for free.

Free is usually good.  But, talking candidly now, if you offered to lease mom’s car for six months, rather than borrow it, now we can get your bankruptcy approved.  I’m allowed to tell you that in a “robust discussion.”  But I have no advice on the matter.

Just before the Milavetz decision came down, I had some clients ask me if they were “allowed” to buy a car before filing bankruptcy.  I told them I couldn’t tell them to do it, but I could tell them they were allowed to do it. The enforcement people from the Justice Department asked some very pointed questions about that.   With help of the Supreme Court, they finally agreed I was allowed to tell my clients they were allowed to finance a car.

Keep this in mind.  If you decide to trade in the 96 Chevy on the 2002 Pontiac, it’s not because I told you to.   I’d never tell you to do that.

If you do it, it’s because you decided.

Remember, you didn’t read it here.

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Robert Weed has helped twelve thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.

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120 comments
  • Kristeen Smith

    February 3, 2011, am28 7:50 AM
    01

    Hi,

    This is Kristeen Smith, a financial writer. I came across your site http://robertweed.com/ while surfing the Internet and went through it. I like your site for the informative content and its vivid presentation.

    I am eager to make guest posts for your site on unique but relevant topics. It will be a great pleasure if you allow me to do that.

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    I thank you for spending your precious time on reading my mail. If you are displeased, I beg your pardon in advance.

    Best Regards,
    Kristeen

    • Robert Weed

      February 3, 2011, pm28 12:58 PM
      02

      “Informative and vivid.” I’m flattered, thanks.

  • Jessica

    March 29, 2012, am31 12:12 AM
    03

    This is one wonderful article.
    Very informative – makes me feel happy for your clients
    and to hope that I can find an attorney as knowledgeable as you are

    • Robert Weed

      March 29, 2012, am31 6:22 AM
      04

      Jessica

      Wow, thanks.

  • Bob

    June 7, 2012, am30 11:46 AM
    05

    You sir have helped me out significantly. I’m losing my vehicle in the bankruptcy and can’t claim it on the means test.

    So now I’m in the market for another vehicle, and I’ve already filed for chapter 7, but did a skeletal filing and about to submit for an extension. What to do, what to do? I think you’ve provided a great resource to everybody in similar situations as me, because I know I will need to purchase/finance a vehicle anyway.

    • Robert Weed

      June 7, 2012, pm30 8:53 PM
      06

      Bob:

      I’m glad that my posts have been helpful.

      When I meet with people, I talk about things like what are we doing with your car, if you give it up, how will you get around? All those things should be worked out BEFORE the bankruptcy is filed.

      If you really need to FINANCE are car, here’s a link to people who do that for people who have just filed Chapter 7. http://www.722redemption.com/home.php. The might also redeem the car you have–allow you to refinance it just at book value. (You did NOT tell me why you are giving it up. Is it a lemon? Or just too far upside down? Or some other reason?)

      But if you have to give up the car you have, exhaust all your other options before you get into a HIGH INTEREST car loan. Do you have an uncle who has an 05 Pontiac he doesn’t need? Do you know someone who really knows cars–who can help you shop at a car auction? Do you have a neighbor or friend at work who has a junker and will finance you at $100 per month for two years.

      If there is any way at all to get to work, do NOT finance a car until three years after your bankruptcy.

      • david redmond

        January 12, 2014, am31 3:25 AM
        07

        hello i filed bankruptcy and was discharged on dec 3 2013 had a 2004 Chevy blazer and tried .722redemption and they did not help at all her name was Sharon Monroe told me that the finance amount is going to very close and then said they could not help place like this that claim they can help the lawyer one told me they help since it was a upside down loan and didn’t so long story
        had amend my bankruptcy cause that 722 said basic owed to much i owed 7300 and was worth 4300 so i would not tell no one about this site they help if you dont owe that much but if i didnt owe that much and had money why would i have file

        • Robert Weed

          January 13, 2014, am31 10:52 AM
          08

          David:

          Congress changed the law in 2005 to make you pay a lot more if you want to redeem your car. So that makes it a lot harder to get a redemption that makes sense. I do a lot fewer than I did then.

  • Steven

    October 20, 2012, pm31 12:10 PM
    09

    How does this work if you have 1) leased car and 2) a car that is paid for in full but is getting old and may not last 5 years? Better to finance a used or new car prior with good credit then to try to finance the leased car halfway through bankruptcy?

    • Robert Weed

      October 20, 2012, pm31 12:19 PM
      10

      Steven:

      You’ve analysed it right. If you have a car that may not last long and you are thinking about bankruptcy. Getting another car BEFORE your credit goes bad is often the smart thing to do.

      It’s illegal for your lawyer to TELL you to do that. But it’s legal for your lawyer to tell you that it’s LEGAL for you to do it.

  • Sharon

    December 9, 2012, am31 4:56 AM
    11

    My husband and I leased a 2011 Sienna in 2010 for three years (I was unexpectedly in a car accident and the 2007 van we were buying was totaled; no one was injured thankfully.) The dealership was offering good deals on leases at the time. The payment was $397. We had been struggling but were able to hold on after I received a small inheritance. Since 2010, gas and food prices, growing kids (ages 13, 11, 8), a couple of small periods of unemployment for my husband, brought a significant increase in credit card use. I had been staying at home raising the children but went back to work at the end of 2011. I also have a student loan that I had deferred off and on for a number of years.

    Our monthly payments to credit card companies have become unsustainable. My school loan comes due again January. We know we are going to file for Chapter 7. At this point, our income qualifies us and we have enough money for our budget, minus the credit card/medical debt. We went to the dealership to talk about buying out our lease and purchasing the van, knowing that we will not have the same loan opportunities for quite some time. Mu husband’s credit score was 638 (I didn’t know that credit scores vary, depending on the purchase). Mine was higher but less than 700. We were offered zero percent interest on a new Sienna. The mileage on our 2011 was getting close to 39,000, and we were worried about going over the limit (45,000 with over 8 months to go). We owed about $3600 on the old lease and could buy the van for $16,000 something, plus the $3600. Financing was going to be 6.99%. We decided to buy the new vehicle so that we didn’t have to worry about anything but simple maintenance for a few years. We were given a trade in value that cut the owed money on the lease by half. We also bought an extended warranty plan for 100,000 miles that was part of the financing. The payment is a hefty $553. We have a 2001 Accord that is a good car but requires us to put repairs in more often lately.

    We had intended to file for Chapter 7 in January. We want to get this over with. I am now worried that we should wait a full 90 days before filing. Right now, our credit is not great, but not horrible. By the end of 90 days, it will be even worse. Are we going to look terrible to the trustee if we file before the 90 day period?

    Thanks for any comment you have. I know you can’t give legal advise.

    • Robert Weed

      December 9, 2012, pm31 12:59 PM
      12

      Sharon:

      Your question is whether it’s too soon after you upgraded your car to file a Chapter 7 bankruptcy? You planned (with your lawyer?) to do January but now you are wondering about December.

      Well I’d sure do what your lawyer suggests. He knows the judges and trustees in your area better than I do. Moving ahead a month early because “we want to get this over with” sounds like the kind of impulse decision making that maybe got you in trouble to begin with. My advice is do what your lawyer said. Calm down. Stick with the plan.

      Here’s one thing I can add. I tell around a third of my client that they should wait for several months, sometimes over a year, in order to get the best result. Waiting one more month seems perfectly normal to me.

  • Michael

    December 20, 2012, pm31 12:43 PM
    13

    Robert I am thinking about filing chapter 7. I have a mortgage 3 credit cards two very high a boat loan and a car loan. I would like to only get rid of the credit cards. My boat loan 1 credit card and my truck is all with BOA. I was told they probably wouldnt let me keep my truck and boat due to BOA wanting them for discharging their credit card. Also the boat and truck loans are owed about what they are worth. possibly less. Is there any truth to this?

    Thanks you

    • Robert Weed

      December 23, 2012, pm31 2:44 PM
      14

      Michael:

      You do NOT have to worry about Bank of America repossessing your truck and boat because you file bankruptcy on their credit card. Credit Unions can do that but banks don’t.

  • Alana

    January 3, 2013, pm31 2:04 PM
    15

    I have a vehicle financed with a credit union that I also have a small personal loan and a credit card with. I know because of cross collateralization with credit unions that I will have to re-affirm on all three of those debts or claim bankruptcy on all three of those debts and lose my vehicle. Knowing this; is it okay to go out and buy a cheap vehicle using a credit card before my financed vehicle is repossessed and before filing bankruptcy so that I am not left without a car to get me back and forth to work?

    • Robert Weed

      January 3, 2013, pm31 4:57 PM
      16

      Alana:

      Well, I would not want to say it is ok. The problem is putting a debt on the credit card that then would be wiped out in the bankruptcy. I sure can’t say that’s ok.

  • Carmen

    January 5, 2013, am31 2:07 AM
    17

    We were advise by our attorney to trade in our 2 vehicles and get new ones because they wouldn’t last the 5 year plan. When went to file the chapter 13 trustee objected it. Stated it was too high debt because we rolled in debt and it was too soon. Can they take the cars away even though I explained the other 2 cars has serious mechanical repairs. We both work and need 2 cars and have a large family. Will they just increase payment or return te cars?

    • Robert Weed

      January 5, 2013, am31 6:40 AM
      18

      Carmen:

      You’ll have to tell your story to the Judge. I hope he agrees with you and your lawyer that you never would have gotten through five years on the old cars. Some of those Chapter 13 trustees just don’t understand what people need to do to survive. (Some Judges don’t either.)

  • Toni

    January 27, 2013, am31 6:18 AM
    19

    Hello.

    I had to buy a car from a buy-here-pay-here “dealership” and of course, I’m upside down on the note. The car is giving me severe issues and I’m finding that it’s no longer reliable. I wanted to trade the car in but with so much negative equity in the vehicle, it would literally be easier for me to purchase a brand new car without using the junker as a trade in.

    I guess my question is this:

    Is it wise for me to allow my current junker to be voluntarily repossessed, sign for a new car (with a warranty and 5 miles, lol) then begin my much needed bankruptcy process?

    Thank you for your time.

    • Robert Weed

      January 27, 2013, am31 11:23 AM
      20

      Toni:

      You say it will be “literally” easier to purchase a brand new car–but I wonder if your credit is so bad you can’t get a car loan. Otherwise, why did you go to a buy-here-pay-here. It sure sounds like you need to file bankruptcy and get yourself on the road back to good credit. But I doubt, based on the little I know, you can get a good car loan now. Do you have friends or family how have an old car they don’t need or can you take your tax refund and get a junker car that will get you through a couple years until you are back to good credit.

  • Toni

    January 27, 2013, pm31 2:00 PM
    21

    Hello Robert, Thank you for your reply.

    From yesterday’s events. I was told that from one dealer that they could get me into a new car, fairly acceptable interest rate and payments if that is something that I wanted to do (I know the financial manager). They could not take my junker that I still owe on as a trade.

    At this point, I don’t have anyone that can let me use a vehicle for a while until I’m back on my feet. I just didn’t know if it would be a good idea to let this money pit of a car go back, get myself a new car and file bankruptcy on all of my debt.

  • rich

    February 26, 2013, pm28 12:33 PM
    22

    i need help. i have a $600 dollar car note and paying $1400 rent with only $1600 monthly income. My wife left me

    • Robert Weed

      February 27, 2013, am28 7:10 AM
      23

      Rich:

      A bankruptcy lawyer where you are can help you with the car note….not with the wife leaving.

  • Steven

    March 2, 2013, pm31 11:16 PM
    24

    If you buy a new car, shouldn’t you wait 30 days before filing due to verifying the lean was recorded with the DMV? Does the $496 amount mean that’s the maximum you can claim for car expenses?

    I also have bad credit and cannot get a used car loan because the interest rates are too high I did find a dealer who has new cars and the numbers are coming out below the $496, is a new car purchase looked down upon as long as it’s not a luxury brand?

    Thanks

    • Robert Weed

      March 3, 2013, pm31 1:48 PM
      25

      Steven:

      Yes, if you buy a car before bankruptcy you should wait 30 days before filing to verify the lien was recorded at the DMV. The $496 (now $1517 with an inflation adjustment) is the floor you can claim if you have any car payment. If your actual payment is more over five years, you can claim the actual.

      I can’t say whether you’ll be attacked for buying a new car right before bankruptcy. That depends on the attitude of the judges and the US Trustee where you are–and also on why needed yo buy a car now. How long is your commute? How bad was the car you are replacing? You need to talk that over with your own lawyer who is familiar with your local personalities and your specific situation.

  • Steven

    March 3, 2013, pm31 10:13 PM
    26

    Thanks for the info and the more I read some lenders, like Ford Credit will require reaffirmation if you get a loan with them then file bankruptcy after. I do not totally understand the details, but from what I read an agreement to pay the loan in full and give up some rights in the process. I read that some lawyers strongly suggest not signing them, but when you need a car and can’t get approved from anyone else what are you to do? I have a real bad credit score now, I think it’s in the low 500′s?

  • Joe

    March 27, 2013, pm31 4:11 PM
    27

    Robert:

    Is there a time frame that the court looks at with new purchases? For example, if I bought a new car today, how long should I wait to file? Should I wait at least 90 days or longer?

    • Robert Weed

      March 27, 2013, pm31 4:20 PM
      28

      Joe:

      Well it needs to be at least 30 days so that the car finance company has finished the title work and is properly recorded.

      Beyond that, it depends on the facts of your case. How bad did you need a new car? Did you need a car payment to get income eligibility or did you have that already? Those are the two obvious factors I’d discuss to see whether there was any concern…and if we needed put some time between the bankruptcy and the car purchase.

  • Bunnie

    March 29, 2013, pm31 11:10 PM
    29

    my hubby and I have been playing around with BofA for a while and decided when we went into foreclosure to do debt consolidation on our credit cards. Well hubbys went badly, company advised him to BK and then they were sued. He got back some of his fees but I am still in doing debt consolidation for credit cards only and he isnt doing anything at the moment (just taking a breath) I only have about 10k debt and he has about 20k well Im affraid of whats going to come of this B of A fiasco if they indeed ever actually foreclose on my house.. um their house.. or my house. So I am thinking we may have to BK in the end but my husbands car will be paid off in oh about 8 mths and its a nice car. Will they take it in the BK?

    • Robert Weed

      March 30, 2013, am31 8:29 AM
      30

      Bunnie:

      Lots of things go by the name “debt consolidation” and half of them are scams. Sounds like hubby sort of figured that out when he got sued and “got back some of his fees.” You are still doing it???

      Now you are worried about whether you can protect your car in a bankruptcy. Each state has its own laws on that, and it depends on what the car is worth and what you still owe on it, but it’s about time for you to go talk to a bankruptcy lawyer.

      People are afraid that lawyers are sharks–and some of them are. But I tell people who come to see me that you can see my law license on the wall and you know where to send the cops if I just steal from you.

      Instead of a lawyer in your city you’ve trusted some people on the internet who you can’t see who claim to be in Chicago. Does that make sense?

      People are afraid of the bankruptcy law, too. But Donald Trump is smart enough to use the bankruptcy law to protect himself. You should see if you can use it to protect you, too.

  • David Poirier

    April 9, 2013, pm30 8:52 PM
    31

    IS IT BAD TO BY A LESS EXPENSIVE CAR THAT IS OLDER TO LOWERS MY MONTHLY PAYMENTS & STILL BE AROUND THE SAME TOTAL FINACED.
    2013 VS 2005

    • Robert Weed

      April 9, 2013, pm30 9:29 PM
      32

      David:

      Doesn’t seem bad to me. I’d need to know more to know why you are worried.

  • Mandy

    April 9, 2013, pm30 9:00 PM
    33

    Question…my husband and I bought a car in 2007 and refinanced it not once but twice. The 2x after we financed $7000 more than what we paid for it. We bought it for $17000 but have already paid back $23000 on the loan. We still owe over $11000 on it. I guess we were stupid. What happens if we file bankruptcy chapter 7? Can we get the loan company to accept what we already paid as payment in full being that the car now is probably only worth $9000 or so?

    • Robert Weed

      April 9, 2013, pm30 9:28 PM
      34

      Mandy:

      Sorry, the short answer to that is No.

  • Thomas

    April 12, 2013, am30 11:40 AM
    35

    Thanks so much for your responses to peoples various questions.
    I have a simple question (I think).

    I’m in Florida and we only have a $1000 auto exemption in Chapter 7.
    I have a 2011 car financed with 2-3K in equity.
    I also have an older car (unfinanced) that I inherited from my father that is not running that I have been slowly fixing and I do NOT want to loose it.
    Can I finance this older car prior to filing Chapter 7 and if so, within what time frame to avoid problems? If I use the funds from this financing to live on instead of my Soc Sec check as I do now, will I have problems?
    I can then add my saved Soc Sec to the FL exemptions to ‘buy back’ the equity in the cars.

    • Robert Weed

      April 12, 2013, pm30 12:14 PM
      36

      Thomas:

      Thomas:

      I’m real good at knowing how to maneuver the Virginia exemptions. I don’t know any more than what you have told me about Florida, so your guess is better than mine. Sorry.

  • Star

    April 22, 2013, pm30 8:05 PM
    37

    Hi Robert,

    My name is Star and I am a full time college student. I have been thinking about filing bankruptcy on some credit card debt (less than 20k) that I have been trying to pay for years but can’t manage to put a dent into it. The only “assest” I have is my car which I use to drive to school.

    I work on campus, earning federal work study. I maybe make about a hundred dollars a month, financial aid and student loans are what pay my bills.

    I am not really sure how the bankruptcy process works. Do states have advising for people who can’t afford to file? I am trying to save up enough money to file but so far no luck.

    Also I do have one card that has a relatively small balance that I have managed to keep current. I bought myself a tablet so I could use for school work and save on printing and paper. Do people get in trouble for making purchases like that?

    Oh and also my aunt was telling me that if its on your history that you file for bankruptcy that employers won’t hire you. She said that they aren’t “supposed” to do that but they do it anyway. Is there any truth to this?

    • Robert Weed

      April 23, 2013, pm30 12:52 PM
      38

      Star:

      At least some of the time, your aunt is right. They are not “supposed to” but I can’t promise it never happens. Are those cards current? Can you keep them current? Bad debts will hurt your employability far more than bankruptcy. And it sounds like you can’t pay them.

      Legal aid in some areas will pay for bankruptcy, if you can’t afford or lawyer. Although usually only for people who are making enough money that they could get garnished–and it doesn’t look like you are.

  • Lee

    May 19, 2013, am31 2:26 AM
    39

    Hello sir. I recently filed Chapter 7 Bankruptcy on my own in the U.S. Bankruptcy Court located in Tucson, Arizona. I did not use an attorney but only a parallegal to prepare the paperwork. My hearing is scheduled for July 1, 2013..

    At the time I filed on May 3rd of this year, I had an outstanding title loan from TitleMax on my 1998 Toyota Tacoma Pickup for $3500.00. I’ve been making my monthly payment and my next scheduled payment is on the 20th of this month. My truck odometer just turned over the 200,000.00 miles and needs major service/repairs to the sum of about $2,000.00 to keep it running in good condition. It is my only means of transportation and I don’t want to loose it. I didn’t even want to include this loan in my filing, since I had every intention of paying off this debt in order to keep my truck. However, the paralegal told me it needed to be listed.

    I contacted TileMax locally to tell them of my Chapter 7 filing and they told me that they were aware of it and had forwarded my file to their coporate office. I indicated that I wanted to continue to make payments and get my title back. She told me to call the corporate office but assured me that they could still receive my monthly payment at the local office. I did mention to her that it would be 10 days late and I would pay it on May 30th.

    My question to you is the following: Do I have need to worry about losing my vehicle as far as it being repossessed, as long as I continue to make a monthly payment?

    Thank you.

    • Robert Weed

      May 19, 2013, pm31 10:58 PM
      40

      Lee:

      Well your “paralegal” was right–you can pay anybody you want to pay, but leaving the title loan off the BK would be lying to the judge. Judges can get mad when you lie to them.

      Probably the title loan people will be happy to get your payment, even a little late, rather than a repossession. But you didn’t tell me what kind of car it was. If you have a $2500 title loan on a 2009 Jaguar, then they would be more likely to WANT to repossess the car.

  • nancy

    May 25, 2013, am31 1:17 AM
    41

    Hi Robert,

    I plan to file chapter 7 bankruptcy and was wondering if my truck would be sold as an asset or would I be able to keep it? It is a 2007 Toyota tundra valued at around $25,000 this is my only vehicle and I own it (no loan). I have $6,000 in credit card debt and a 2nd mortgage of $40,000, first mortgage went into forclosure. I do not want to lose my truck when I file.

    • Robert Weed

      May 25, 2013, pm31 3:09 PM
      42

      Nancy:

      Depends on your state. But in most places it would take some careful planning to protect that truck–so if you think you might need bankruptcy, I’d see a lawyer now.

  • Nathan

    May 29, 2013, am31 3:38 AM
    43

    Hi Robert,
    I filed for Chapter 7 in the state of Ohio just within the past couple of weeks. I am currently in a financed car that is valued around $19,275 for a clean trade in. I owe roughly $27,500 on it. It was a poor decision when I got the car……hindsight being 20/20. My previous car was financed and in the switch, I now owe $8,225 more than what my car is really worth. I don’t know if I should reaffirm the loan or not……the payments are roughly $150-$200 more than I can really handle right now. Do I reaffirm? Give it up and get a new/used car financed at a higher interest rate? etc. Your help would be appreciated.

    Thanks

    • Robert Weed

      May 29, 2013, am31 11:19 AM
      44

      Nathan:

      I don’t think you should reaffirm; and I also don’t think you should go out and get another car at a terrible interest rate.

      If at all possible–obviously I don’t know your situation–check out your personal safety next and see if you have an uncle who has a 2001 Pontiac he will let you have to get you through a few years until you get back to good credit. Or a friend at work will will sell you their 2004 Honda and will take monthly payments. Or if you know somebody who knows car, go to a car auction and buy something.

      Obviously I don’t know you or your situation, but try all those possibilities first.

  • jane

    June 17, 2013, pm30 8:10 PM
    45

    Hi Robert,
    I have a vehicle that is 5 years old and am still paying on the loan (1 more year of payments). I was recently informed by my mechanic that the car is in need of repairs totaling about $800. I am also currently being sued. I am in the process of selling assets to try and settle the lawsuit. If they will not settle I plan to use part of that money to pay legal fees for protection under bankruptcy. In the case of a chapter 13, I would like to trade my vehicle in for a new one rather than spending part of that money on repairs and then facing more problems during the course of chapter 13 payments. My family is my foremost concern and as such require a reliable vehicle to take my kids to school and get me to and from work. I have about $2000 of equity in the vehicle. So for the down payment on the new vehicle it will be the $2000 in equity plus an additional $3000 cash remaining from selling assets. Because of the huge depreciation upon purchasing a new vehicle, the equity will be below the exemption allowance. Is this type of pre bankruptcy planning allowable?

    • Robert Weed

      June 17, 2013, pm30 8:14 PM
      46

      Jane:

      Maybe…you are thinking clearly and asking the right questions. You should discuss it with a lawyer in your area who is familiar with your Judge and your trustees…

  • Hope A.

    June 28, 2013, am30 11:31 AM
    47

    Godd Morning, I have had 2 cars repossed this month both financed through different credit unions however, one of the credit union where I also have a savings account has frozen the account and taken not only the 3 months I was behind but now also more than the payoff amount. I am now unable to pay my rent and other bills. What should I do? I am in Virginia

    • Robert Weed

      June 28, 2013, pm30 3:17 PM
      48

      Hope:

      I’m sorry. First, you need to change your direct deposit so no more money goes to that credit union. Second you need to talk to a bankrutpcy lawyer about filing bankruptcy, so you can clean all that up and don’t need to worry about filing bankruptcy. I can say that basically EVERYBODY who has a car repossession, much less two, needs to talk to a bankrutpcy lawyer and nearly all of them need to file bankruptcy. Putting it off just leads to bad surprises.

  • Jasmyn

    August 2, 2013, am31 6:37 AM
    49

    Hello
    I am going to file a chapter 7 bankruptcy in Texas I have a title loan of 6640 my monthly finance charge is 670 I cant afford it anymore because of medical bills and losingmy job. I dont want to lose my car if I file will I have to surrender it? Or can they take the car even if i filed before they pick it up? I have been paying 670 since last September 2012 I just cant make it. I was going to use my tax return but it was taken and is being held still my car is a 2007 Volkswagen jetta worth 8,000

    • Robert Weed

      August 2, 2013, pm31 6:51 PM
      50

      Jasmyn:

      If the title loan is a big problem, you should talk to your lawyer about Chapter 13. You could use Chapter 13 to cut the interest to a fair rate–maybe 5% depending on your judge–and pay it off over three years. Now, there may be other reasons why you don’t want to do Chapter 13…that’s why a long talk with a careful lawyer is what’s needed. A 2007 Jetta might have some good life left in it. You’d want to discuss that with your lawyer, too. If the Jetta is shot, then maybe you’d want to file Chapter 7 and give them the car back.

      The job of your lawyer is to use the bankrutpcy law to get you back on the road of life–you need to have a complete picture of your situation to know what’s the right road for you.

  • Amy crane

    September 22, 2013, am30 5:34 AM
    51

    Hi, I’m in a bad situation too, I want to file chapter 7 and get a new car my current car is a 98 Camry which is in bad shape money pit the engine light keeps coming on and no air bags in the car this is a car I brought from my sis with a rebuilt engine bad idea.. My other car is a 99 cougar my husbands car in my name the engine light is on the air is out and it cuts off when driving sometimes and someone hit my brother in it from behind so now it’s wrecked!!!! Ugh since I have such bad credit in ga a intrest rate of 23.69 percent for a new car at 72 months … That’s horrible and I’m out of options.. I want to know will bankruptcy chapter 7 lower my interest if I file after 90 days of getting this car?

    • Robert Weed

      September 22, 2013, am30 11:35 AM
      52

      Amy:

      Chapter 7 helps people with their car payments in one way–by letting them build back to good credit over the next three years. People who filed bankruptcy three years ago are generally able to get a car loan now at 6.9% or maybe better. The problem is how are you going to get around for the next three years?

      Chapter 13 can reduce the interest rate on a car that you have–by making payments through the court and putting a garnishment on your check to pay it. You could get that car payment down some by paying it through a five year chapter 13. You need to lawyer in your area who knows what your judge thinks to have a good idea how much you’d be able to take that payment down. By the time the court adds their handling fee and you have to pay the lawyer–it might not save you much.

      And Chapter 13 would mean your not back to good credit for about seven years–I hate that.

      If your credit is shot, I ask people to really think if you have some way to get another junker to limp through three more years. Then do a Chapter to to start to clean up that credit. For me Chapter 13 is a last resort.

      Talk to a good lawyer where you are about what a Chapter 13 would look like for you–good luck!

  • Tiffany

    September 29, 2013, pm30 5:12 PM
    53

    Hello,

    I am considering filing a Chapter 7 bankruptcy in New York early next month ( October 2013). I am worried about my car, I purchased it in June 2013. It is a 2008 Nissan Altima that I am financing and the payment is $350. I don’t want it repossessed
    What is our advise on this?

    • Robert Weed

      September 29, 2013, pm30 7:09 PM
      54

      Tiffany:

      You need to talk to a lawyer in New York!

  • Robert Weed

    October 9, 2013, pm31 7:58 PM
    55

    This week Judge Brian Kenney here in Alexandria said it was ok to buy a Ford Focus right before filing bankruptcy, to replace an eight year old Mustang with a more reliable car. The Supreme Court had said basically the same thing in a case called Milavetz, but it was still an important win. chapter 13 trustee Thomas Gorman fought me hard on the other side.

  • shannon

    October 10, 2013, pm31 11:12 PM
    57

    We have one car that is paid for and thinking of trying to file bancruptcy and are missing it by a few thousand for chapter 7, we really need two cars and if i go buy one from a bad credit no credit place will it fix my problem to where i can file chapter 7

    • Robert Weed

      October 10, 2013, pm31 11:21 PM
      58

      Shannon:

      I’d spend about an hour going over one of my client’s complete situation before I’d answer that question. You need to go over your situation with a good lawyer in your area and figure out the best thing to do.

  • Liz

    October 13, 2013, am31 6:14 AM
    59

    Hi. I stumbled on your site while trying to learn about options and circumstances with filing chapter 7.

    I’m in Florida and my home is in foreclosure since 2009. I’ve been trying to fight for my home all this time, but after the last motion hearing, it’s not looking good. At this point, I’m waiting on the trial date. I can’t really afford an attorney anymore to help me fight any longer, so I’m thinking that as a last resort, to file chapter 7, to buy me more time to find an affordable place to move to.

    I have 1 car that was finally paid off in June. I need my car to commute to work, about 30 minutes away. When the time comes to move I’ll try to find a place closer to my job, which could help on the cost of gas. Also, because of my low salary, I will try to apply to Section 8 – Housing Choice Voucher, in the hopes of getting on the list to help in securing affordable rent for a place to live for me and my son.

    I’m under-employed, barely able to afford my monthly expenses, so if I lose my car, it will be difficult to get around. Florida has a $1,000 exemption on cars. My car is a 2007 Chevy HHR. I looked up on Kelly Blue Book’s site that showed a current value of about $4,615 (for good condition) on my car.

    Do you think I’ll still lose my car in the bankruptcy, despite the fact that they will get the house anyway?

    • Robert Weed

      October 13, 2013, pm31 12:30 PM
      60

      Liz:

      There’s also a Florida “wild car” exemption. If you don’t have a lot of cash–sounds like you don’t–you might use the wild card to cover the car.

      You really need to talk to a bankruptcy lawyer in Florida to plan your exemptions.

  • Chris

    October 18, 2013, pm31 8:54 PM
    61

    Was looking on the web to find out about filing bankruptcy and saw your site. My question to you sir; my wife and I have a (Car Title Payday Loan” in the state of Texas. This loan is very unmanageable. We were duped into signing a contract with this company due to an apparent (promotional deal) they had at the time. We were not aware the rates would increase to almost a 400% interest rate the next month. When the contract was changed we were under the impression it was the same contract we signed the previous month and just glanced at it and signed it. The next month we went back to pay and found out we owed money we could not possible pay. We were trying to find a way to keep our car maybe go after the title Title Loan Leander for fraud and was considering filing bankruptcy in hopes we would be able to keep our car. This car is our sole means of transportation.

    • Robert Weed

      October 18, 2013, pm31 8:57 PM
      62

      Chris:

      I don’t know enough about Texas law–I don’t know anything–to know if you have some non-bankruptcy way to fight them.

      You can probably do a Chapter 13 bankruptcy to take the interest on the car down to 5% and pay it over 36 months. That’s a drastic remedy, and I’d need to know ALL ABOUT YOU before I’d recommend it, but it’s something you might discuss with a lawyer there.

  • Angel

    October 23, 2013, am31 12:07 AM
    63

    Hi Robert,

    I have a credit card through my credit union. Is this credit card considered secured, meaning it can’t be rolled into my bankruptcy?

    Thank you,

    Angel

    • Robert Weed

      October 23, 2013, am31 11:09 AM
      64

      ANGEL:

      I need more detail to even know what you are asking me about.

      1. Do you have a car loan with the credit union? They make you sign in small print that all loans count as part of the car loan.

      2. Is the credit union holding a CD deposit against your credit card?–you are going to lose that CD to pay the card, probably.

      3. Are you just worried about the credit union grabbing your paycheck when the direct deposit hits? Change banks!

      Those are all things you should talk to your lawyer about and see what applies to you.

  • Sue

    October 29, 2013, am31 12:03 AM
    65

    I have a question, we filed bankruptcy a few years ago, they were supposed to take our junker car… we still owed like 4000 on it. Completed the bankruptcy, the bank never came to pick it up. So we still have it. But not the title. Now the truck was in an accident this morning and were pretty sure its totalled. We we get the money for this car? Should I rush and file for a abandonment title? Help.

    Thank you,

    • Robert Weed

      October 29, 2013, am31 9:51 AM
      66

      Sue:

      Right. they often don’t pick up the car after the bankrutpcy if they don’t think it’s worth the trouble. But they don’t send you the title either.

      Now that it’s totalled, obviously you need to report it to your insurance. But I’m expecting they will pay the bank for it, not you. I don’t know any way around that. I don’t know what an abandonment title is.

  • Sue

    October 29, 2013, pm31 1:55 PM
    67

    Thank you for the information. An abandonment title is when someone abandons a car, Im thinking the Bank has abandoned the car. They have 45 days to respond if they don’t I get the title. Im going to try it we will see. Im just afraid Im going to be in trouble because the car is totaled?

  • Reggie

    December 19, 2013, am31 2:42 AM
    68

    I have been considering filing bankruptcy for quite some time now as I defaulted on several credit cards and installment debts when I was unemployed for nearly a year and all of them are in collection now. I got a new job but lately the only thing delaying me is I was just over the income limits for a Chapter 7 without a means test and even though I still technically qualify with the means test I wanted to be under so there is no doubt or chance of being categorized as a CH13.

    In any case, lately the issue that is bothering me is I am currently leasing my car and it is going to reach end of term in 12 months. I dont really think I will be allowed to buy my leased car with a recent BK and without that option I wouldnt exactly have the best options available to me for any other car either. If I am able to qualify to get in a new car now would it work if I then pay for both while claiming (and legitimately attempting) to try and get somebody to takeover my lease (worst case, I default on it and get it discharged later in my CH7) and therefore I would be able to keep the new car as long as I stay current on those payments? Is that a good idea? Also I read up in the previous posts that once I buy I should wait 30 days to have the title recorded in the DMV and such, should I also wait the full 90 days after buying the new car so it looks better to the trustee? At this point Chapter 7 is an inevitability so I just want to be prepared for the next 5-7 years and make the best possible financial choices so life within the BK isnt unbearable.

    • Robert Weed

      December 19, 2013, am31 11:17 AM
      69

      Reggie:

      You are definitely thinking very clearly about your choices, and you’ve done a lot of research. But your next step should be to talk to a lawyer where you are, who knows how the judges in your area react. What’s smart here could be a problem where you are.

      You are right to think about how you are going to get around when your lease runs out a few months after your bankrutpcy has been discharged….but different courts have a different attitude about buying before you file. Also, since your credit is already shot, you might very well even six months out of Chapter 7 get a better car loan than you can get today.

  • M

    January 17, 2014, am31 1:00 AM
    70

    Hi ! I too have a question. We are considering chapter 13 ( we will not qualify for 7). I have seen two attorneys. One said she couldn’t help and the other had a lot of info. We are I guess an unusual situation. Up until this month , we have never been late on anything. This is the first month I wasn’t able to pay all my bills, though they haven’t hit my credit yet. One attorney advised us to go out and get two new ( much cheaper ) cars while we still have good credit (low 700s), and then let our current cars be taken during the bankruptcy. We both drive luxury cars, he said we won’t be allowed to keep the current cars most likely, and that it would be better to go car shopping now, rather than waiting until our credit is hurt. Do you have any thoughts about this idea? Any help is greatly appreciated !

    • Robert Weed

      January 17, 2014, pm31 9:23 PM
      71

      M:

      There are lots of reasons to go buy a car while your credit is still good. Some judges like some; some like others. I, obviously, don’t know your judge. A don’t know what you are calling a luxury car. I don’t know how long you’ve had those luxury cars. And I don’t know why you can’t qualify for Chapter 7. I’m hoping your lawyer knows your judges and is giving you good advice for where you are. The advice you are getting is the RIGHT advice in some situations. Whether it’s right for you, I can’t say.

      The area I serve has four of the twelve highest income counties in America–I have offices in all four. So our idea about what’s a luxury car and what’s income too high to get into Chapter 7 is probably different than where you are.

      • Michael

        January 24, 2014, pm31 10:31 PM
        72

        I’m thinking about filing bankruptcy I have cable bills credit cards a bill for my old car accident I had a while back library payment. And I have a car loan I still owe $9,000 on but I wrecked it. Will filing bankruptcy help me at all? I’m really desperate and can’t handle this sress.

        • Robert Weed

          January 24, 2014, pm31 10:35 PM
          73

          Michael:

          Sure sound like it. Should get rid of all that–unless there’s something you didn’t tell me. (Like the car accident was a fatal DWI, or you put $50,000 on the credit cards in the space of four weeks.) A good bankruptcy lawyer will want to know your complete details before you go ahead, but based on what you say it’s definitely time to talk to a lawyer.

  • Cody

    February 6, 2014, am28 7:12 AM
    74

    Hello Mr. Weed.
    I have three auto loans my 2014 Chevy(899$month) my 2013 dodge ($661month) and my 2006 Ford ($512month). I’m upside down in all three I made some stupid mistakes but my wife and I would like to keep the Chevy and the dodge because they are much more dependable. We have two kid that we drive everywhere. Is it possible for us to keep the two more expensive vehicles if we file chapter 7 in nv

    • Robert Weed

      February 6, 2014, am28 11:35 AM
      75

      Cody:

      The usual rule is if you keep up the payments you keep the cars. Now I wonder how you got an $899 (!) payment on a 2014 Chevy and whether the “stupid mistakes” that you made are bad enough to really piss off your bankruptcy judge. So I don’t know the details of your story.

  • Brandi

    February 9, 2014, pm28 11:18 PM
    76

    Hi my name is Brandi I wanted to finance a car when I get my tax money it’s about $7000 dollars and ill put a 1000 down… but I had already had in mind to file bankruptcy. … Would it be a good idea to put the money down now or wait but I need to do both asap… thanks in advance for your advice…..

    • Robert Weed

      February 10, 2014, am28 11:05 AM
      77

      Brandi:

      Thanks for you question but I don’t know the answer. Don’t know what state you are in and the answer would be a little different for each state. If I knew you were in Virginia, I’d still want complete details of your situation before I answered that question.

  • Stressed

    February 25, 2014, am28 3:58 AM
    78

    I’m in Georgia and my ex-husband fraudulently got and used credit in my name without my knowledge (and I have notarized statements admitting responsibility), which so far adds up to maybe $10k on several different credit cards. He also had a large car dealership run my credit without my knowledge, and then he and the salesman got me to “drop by” the car lot and spent the next 2 hours pressuring me to co-sign with him on a new truck. I finally did. He never made a payment and now I have a $20k lien on my home, and I’ve been paying $100 a month for the last 3 1/2 years, to the attorneys for GMAC, and the balance keeps going up. It was actually $16K in 2010 and now, after almost 4 years of faithful payments, it’s just under $20k. (The ex-husband, however, is disabled and only draws a social security check, which debtors know they cannot touch, so they are all suing me, regardless of the fact that I notified them my identity was taken back when it happened 5 years ago.)

    I pay $1200 a month for my mortgage, and then have roughly $700 or so in utilities, cable/Internet, cell phones. I own with no payment 4 older cars, 2 of which are immobile and have no registration and insurance. The other 2 are a 14-yr-old Ford sedan and a 1991 semi-sportscar.

    I have a 25-yr-old son who lives with me and is unable to work due to mental illness but does not yet draw disability; I fully support him, as well as paying for his medical insurance, doctors’ visits, and therapy visits. Here’s my question: Using the online means test calculator, I’m over the limit if I only support him and myself. However, I have a 23-year-old daughter who owns a home with her boyfriend and who has a 1-year-old baby boy. My daughter and her boyfriend have separated before, in which case the daughter did move back home with her mom, so it’s feasible that only the boyfriend lives in the home that the 2 of them own. Also, my daughter, who does not work and is a full-time college student, files her own taxes (and is not claimed as a dependent) and counts her son as a deduction.

    Thank you in advance. The stress is killing me and relief is far overdue.

    • Robert Weed

      February 25, 2014, am28 11:20 AM
      79

      Stressed:

      You really need to talk to a bankruptcy lawyer where you are in Georgia. It would have been smarter to have done that when GMAC first sued you, before they got a lien on your house. (Or when you first knew that the dealership ran your credit without your approval.)

      Your question shows the danger of trying to be your own lawyer based on partial info. Many people over the median can still get approved for chapter 7–depending on things like how much is your house payment and whether you are in a high cost of living area of Georgia. And also does your adult disabled son need special medical (or educational?) services.

      But the important question is what can you do about that lien–and that depends on whether and how much it’s attached to equity in your house. And whether you need to file bankruptcy at all, or can just stop paying the cards where your ex put in your name without your knowledge and file an ID theft report. Would claiming (and proving) ID theft on those cards free up enough money to then pay off that car lien?

      On top of the stress of your bad decisions and your financial bind is compounded by the stress of trying to be your own lawyer.

      • Stressed

        February 25, 2014, pm28 9:52 PM
        80

        Agreed, and thank you so much for the reply.

  • Brandy

    March 4, 2014, am31 5:16 AM
    81

    Dear Mr. weed,
    I have been reading your articles, posts and responses to questions for several days now. I am grateful to you for being so open and blunt on many .issues I couldn’t find elsewhere.
    My husband and I are about to file for bankruptcy in Arizona. The question I hope you can help with is this:
    We had a title loan on an older vehicle that was stolen several months ago. It was recently recovered and returned with quite a bit of damage, causing it to no longer be worth the amount of the title loan. The vehicle is a 3rd car for my family as my husband and I each have our daily use cars and this was more for camping as it is an older truck with a lot of miles on it. I am simply wondering what to do with the vehicle at this point. When it was stolen, I assumed the debt had become non secured? Now I don’t know what will happen. I would like to keep the truck as it was a gift from my deceased father.
    Any thoughts would be grateful.. thank you for your time and help as many lawyers do not have the extensive replys you have. Those of us needing help greatly appreciate you!

    • Robert Weed

      March 4, 2014, am31 11:42 AM
      82

      Brandy:

      In Chapter 7 bankruptcy you can redeem the truck. You can ask the bankruptcy judge to set a book value on it–and then pay the title loan people the book value. Then they have to send you the title.

      • Brandy

        March 4, 2014, pm31 3:29 PM
        83

        Mr. Weed,
        Thank you so much for taking the time to respond and help!
        Book value.. would that be what it is worth in the condition it is in now with the damage it incurred while it was stolen, the value it held at the time we took the loan or somewhere in between? Would we still be able to make payents and still be paying the outragous interest rate or would the judge adjust that as well?

        • Robert Weed

          March 4, 2014, pm31 3:32 PM
          84

          You’d have to pay it off in a single payment

          • Brandy

            March 4, 2014, pm31 11:57 PM
            85

            Oh wow, ok.. not really an option ay this point. The vehicle was returned to us in pretty bad shape, so we are thinking there’s no sense on keeping it as it will cost so much just to get it in decent shape. Would it be better for our credit when we try to rebuild after the bankruptcy if we let the title loan lender repossess it, then file for bankruptcy or should we file quickly and allow them to take it in the bankruptcy? Last question I promise.. I greatly appreciate your help as I’ve searched the web and haven’t found any help, so thank you for your time!

  • Gerard

    April 4, 2014, pm30 10:33 PM
    86

    I have already filed chapter 7 bankruptcy and my trustee hearing is in 2 weeks. I have 2 cars in my name that are both upside down. My wife uses one. Should I wait until after my trustee meeting to start looking for another car or do it before discharge? the cars are not going to last and I don’t want and can’t afford to throw good money into this.

    Thanks

    • Robert Weed

      April 5, 2014, am30 12:14 AM
      87

      Gerard:

      There’s every reason to start “looking” now–the question is what are you looking for.

      In three years most people have good credit and can get a car loan at 6.9% or maybe lower. (NOT 0.9% however.) The question is how are you going to get around through the next three years.

      You don’t want to go out and replace the bad deal on the cars you have now with an after-bankruptcy bad deal. And a bad deal is all you’re gonna get if you finance a car now.

      So one thing to look for is a junker, or two, that you can buy with cash and that will carry you until you’ve build back to good credit after bankruptcy.

      So you should look now, but don’t give up on the cars you have now until you’ve figured out what you are doing next.

  • Jesse

    May 11, 2014, am31 1:10 AM
    88

    so im filing chapter 7 due to extreme debt. I know I will lose my car I still owe $14,500 on and due to having a credit card with the same credit union. so I recently got a newer vehicle $18,000 loan with my father as the buyer and I as the co buyer. how long should I wait till I file? bad idea?

    also will this effect his credit in any way? new loan was through his credit union and from what I read on line I should or may have to just reaffirm?

    I live in MN. thanks for the very informative site.

    • Robert Weed

      Robert Weed

      May 12, 2014, pm31 6:18 PM
      89

      Jesse:

      Your lawyer will look at your complete situation and know how long you should wait to file. You absolutely want to wait at least 30 days to make sure the title work on the car is done. Your lawyer may see reasons you want to wait longer.

      Your bankruptcy should NOT show up on your co-signer’s (your Dad’s) credit in any way. I explain that here. http://robertweed.com/2013/12/27/bankruptcy-co-signers-credit-report/.

      Your lawyer will also know better than I do if it’s safe to keep up the payments without reaffirming the car. Although since your dad is on the hook anyway, your may WANT to reaffirmn. Your lawyer will go over the advantages and disadvantages.

      • Jesse

        May 13, 2014, am31 12:23 AM
        90

        thanks for the reply. yes I want to keep the car I have with my father. also he is the buyer and im the cosigner in that situation.

  • Gary

    May 11, 2014, am31 5:25 AM
    91

    Hello Mr weed,
    Well my story is I owe about 20 k in credit card and personal loans I recently bought a used car 2009 Camry worth 13 k owe 13 k on it to replace my other car that was totaled in a accident and also recently purchased a used motorcycle that I’m financing ( less than 30 days ago..) I was sued for child support recently had to hire a atty now their hitting me with a 3k bill! I did all the figures and now with my new lower pay I now cannot afford to pay my credit cards and loans! I was on a tight budget but paying everything on time with a 700 credit score ..I’m not late on anything yet, but looks like I’m forced into bankruptcy ..Will I lose both my car and motorcycle since they are both recently financed? Just car? just motorcycle? I’d like to keep both.. What do you think will be the most likely scenario.. Thanks for your help.

    • Robert Weed

      Robert Weed

      May 12, 2014, pm31 6:12 PM
      92

      Gary:

      There are often ways to keep both. But your bankruptcy lawyer needs a complete picture of your situation, debts, income, assets, everything, in order to tell you how it will work for you.

  • mike

    May 15, 2014, am31 3:02 AM
    93

    If I am filing a chapter 13 and am above the means test, do I have to wait 90 days before filing if I trade in my 20 year old car and finance a used vehicle?

    • Robert Weed

      Robert Weed

      May 15, 2014, am31 10:15 AM
      94

      Mike:

      There are a lot of issues involved in trading a junker just before you go into Chapter 13. I have one of them on appeal now. http://robertweed.com/wp-content/uploads/2014/03/Wolf-appeal-decision.pdf.

      How long you can or should wait depends on what problem you think you are waiting out.

      • mike

        May 15, 2014, pm31 2:46 PM
        95

        Thank you for the information. I was told by my attorney that if I didn’t wait 90 days it would be considered fraud.

        • Robert Weed

          Robert Weed

          May 15, 2014, pm31 2:53 PM
          96

          Mike:

          Well, to explain further, I had to do one quicker than that and we ended up a fight on our hands. (It’s now on its second appeal.) If your lawyer thinks you should wait 90 days, that would make sense to me, too.

          • mike

            May 15, 2014, pm31 3:30 PM
            97

            Thank you very much, I needed that second opinion.

  • Josh Whitmore

    June 8, 2014, pm30 10:31 PM
    98

    My wife became very ill in 2009 and we have mountains of credit card and medical dept. 90% of it was while I was still in the military. I was medically retired with 90% disability. inbetween discharge and finding a new job I had a 2011 car repo’ed and we were evicted from out appartment for non payment of rent, later my wife wrecked my 2009 car and my insurance lapsed. I left the car abandoned at the wrecking yard. we have had no vehicle for some time and as luck would have it when I got my taxes this year and my wife has a 5 year old insurance claim settle. With that money we bought a 18,500 dollar car out right, I own it free and clear. Did that ruin my chance of filing chapter 7 and keeping the car we just bought? I am a disabled veteran living in AZ and as i understand it that entitles me to skip the MEANS test.

    • Robert Weed

      Robert Weed

      June 9, 2014, am30 9:52 AM
      99

      Josh:

      Sorry, state laws on that is different in each state. I can’t tell you whether you can protect an $18,500 paid for car in a Chapter 7 bankruptcy in AZ.

  • David Bridgham

    June 13, 2014, pm30 1:54 PM
    100

    Hi Robert, Thanks for the informative article. I went through a bankruptcy 2 years ago. We owed on 2 cars, which we kept in the bankruptcy. One of the cars now needs repairs that cost more than the car is worth. We can get a car loan for another car easily enough. We went to a dealer yesterday. They pulled the credit report, and it showed that we owed $0 on the car. The loan company says we owe $5100. The car loan was forgiven in the bankruptcy, but we signed a “Letter of intent” saying that we “Intended” to pay the loan post-bankruptcy. The car dealer told us that if we turn in the car to the loan company, we’d be free and clear of the car, and that it wouldn’t hit our credit report. I’m worried that if we do this, it will show up as a repossession on my very hard-earned credit. Who is correct in this situation? I don’t trust the dealer, but I don’t want to keep paying on a car we don’t need to.

    Thanks very much for your help,

    -David

    • Robert Weed

      Robert Weed

      June 13, 2014, pm30 8:25 PM
      101

      David:

      Thanks for posting your question.

      I do NOT know what you mean by the “letter of intent” and I don’t know if it was filed with the court. There’s an official form called a “reaffirmation” that has to be filed with the court that promises to keep paying and–unless you change your mind in a SHORT PERIOD–YOU ARE STUCK WITH. If that’s what you signed, and it got filed with the court, you are stuck with that car payment. They can sue and garnish you if you don’t pay.

      If the “letter of intent” was not that official form, then it does nothing. And the dealer is right that you can turn it in and be “free and clear” and that it won’t “hit your credit report.” (At least not legally, you should check to be sure.)

      There’s a form called your “Statement of Intent” and that form is NOT binding, so if that’s what you are talking about, the dealer is right.

      I explain more of this, here. http://robertweed.com/2012/07/22/after-bankruptcy-changed-my-mind-can-i-still-give-back-the-car-2/.

  • Robyn

    June 28, 2014, pm30 10:39 PM
    102

    I filed chapter 7 last june and have a jeep that was included but I have continued to make payments and owe 2 more years. It is starting to have problems so my question is should I let the bank take it back or just continue to pay on it and fix it

    • Robert Weed

      Robert Weed

      June 29, 2014, am30 12:00 AM
      103

      Robyn:

      That’s more a question for a car guy than a lawyer.

      I don’t think you’ll be able to finance a car at a good rate this soon after BK, if you give that one up. Do you have access to a junker that will get you through another couple years.

  • beth

    July 15, 2014, pm31 10:29 PM
    104

    I have a car fully paid for, will I lose it?

    • Robert Weed

      Robert Weed

      July 15, 2014, pm31 10:44 PM
      105

      Beth:

      Depends on what its worth–in Virginia you can keep a paid for car worth up to $6000–or up to $11,000 if you don’t need to use your cash allowance. Are you in Virginia?

  • Karen D

    July 17, 2014, pm31 9:39 PM
    106

    Hi, I have lost my job and while I am only paying to keep a roof over my head, I have a car payment of 503.00 a month for a 2012 Chrysler 200 because of my credit rating. When I bought the car I signed for it and did all the paper work then the bank said no, they jacked up the interest rate but, I was already driving the car and fell in love with it. Anyway a bad decision on my part, I kept it and could afford it until I lost my job. Now I want to refinance but, only work part time. What should I do ? I am contemplating on letting them take it but, I love it. Please advise ?

    Thank you,
    Karen {Hackettstown NJ}

    • Robert Weed

      Robert Weed

      July 17, 2014, pm31 10:23 PM
      107

      Karen:

      That’s a transportation question and a budget question, not a legal question. As soon as your BK is over, you will be able to get a car loan at a terrible rate. Probably the Chrysler is bad but not terrible.

      Do you have a way to get around until you get back to good credit. Do you have an uncle who has on 2006 Pontiac he doesn’t need and will let you have. Can you get together $4000 to pay cash for a 2005 Honda. Do you have somone in the family with strong credit who can cosign for you right out of the BK.

      If the answer to any of those question is yes, then give up the Chrysler. If no, then you probably want to keep it.

      (Sounds like the dealer put you into a yo-yo loan. Told you to drive off on a pretty good loan, and then reeled you back in and put you in a bad one. Some states have strong laws against that. It’s worth going to NACA http://www.naca.net/find-attorney finding somebody near you who does auto fraud law; and see if they are interested in fighting the dealer. That MIGHT be a way to keep the Chrysler at a cheaper price. Your chances in Virignia would not be that good, but almost everywhere has better consumer laws than we do here.)

  • Karen D

    July 17, 2014, pm31 9:42 PM
    108

    Robert, I have another question. I have an IRA and they won’t let me close it out. Is this legal ? It’s my money and I don’t understand this. Please advise ?
    Thank you,
    Karen D

    • Robert Weed

      Robert Weed

      July 17, 2014, pm31 10:23 PM
      109

      Karen:

      Don’t understand. Where’s the IRS and who won’t let you close it?

  • Lisa

    July 22, 2014, am31 4:00 AM
    110

    Mr. Weed first you are extremely honest and I wish you were in my state of California and I had filed with you. My issue is i recently filed Ch. 13 mainly to keep my 2013 Kia Optima. I bought it in Sept 2013 and had rolled over a previous car loan for 8k. So after everything I financed the car for 42k. Currently my Ch.13 plan requires me to pay $675, $625 being the car payment and the rest attorney/trustee fees. Im military and have decided to separate next year. My plan is to keep the car and drive it to alabama and then surrender it, then have my plan amended as my income will not nearly be the same as it is now. My current attorney said I could cram down but after much reading online it seems I do not qualify for the 910 and currently the attorneys for the car are asking i pay the whole 42k not 29k which would increase my payments from the 675. My question is do I qualify for the cram down?

    • Robert Weed

      Robert Weed

      July 22, 2014, am31 10:08 AM
      111

      Lisa:

      You’re right. If you haven’t had the car for 910 days you have to pay the whole balance, although you can cram down the interest rate.

      If you are in a tight spot, $675 a month for a car payment is a lot. If you went to a Chapter 7 now, assuming you are income eligible, could you scrape together some cash and buy a junker that would get your through until you are back to good credit. Whether that’s smart depends on how long your commute is, the ages of your kids, and what you know about cars. So there’s a lot to think about. But a $675 payment just to keep a car–that’s a lot.

      • Lisa

        July 22, 2014, pm31 7:41 PM
        112

        thankfully i can afford the car currently and i do not qualify for a chapter 7. i will just and build my credit for the next year. when i surrender my car i will be able to finance a less expensive car. thanks for the advice

  • mike

    August 6, 2014, pm31 9:19 PM
    113

    Mr. Weed,
    If I sell my house a couple years into my chapter 13 bankruptcy plan, can I keep any of the profits after paying the mortgage off? At the time of filing there was no equity in property.

    • Robert Weed

      Robert Weed

      August 6, 2014, pm31 9:30 PM
      114

      Mike:

      I don’t even know the answer to that in the court here in Virginia. If there was an “unforeseen” increase in the equity, the Chapter 13 trustee would get it. How big does it have to be to be unforeseen? Depends on the judge. What’s the rule in your court? No way to tell from here, sorry.

  • kate

    August 14, 2014, am31 12:00 AM
    115

    Hi,

    My husband and I are almost set to file chap 7 bankruptcy. Most of our debt is credit cards. we have a 2009 car that we just paid off in June that has a trade in value of 9,000.We are in NY I think the allowed amount for a car is like 5,000 so will they take our car in the bankruptcy. That is our only asset. we cant loose or car we need a car. Can we trade it in and lease another before filing . Or will we have to give back the lease? how would that work.

    Or in orer to keep our car should we file chap 13 , but we sooo qualify for chap 7.

    Help?

    • Robert Weed

      Robert Weed

      August 14, 2014, am31 10:32 AM
      116

      Kate:

      I heard from one of my friends who is a lawyer in New York that cars are tough to protect under New York law. I heard that after one of our national meetings in a bar. That’s the total of what I know about bankrutpcy, cars and New York law, sorry. (Well, maybe I heard that the law was changed, so it’s not as bad as it was.) You need to talk to a New York lawyer.

  • Hector

    September 11, 2014, am30 1:39 AM
    117

    I got my car reposes after I crashed it and decided to stop paying for it. The Car was later sold and I had to pay the remainder of the cost. For a while I will get letters in the mail from different collection companies. It has been 3 years since the repossession and I still haven’t paid it back and I don’t receive letters anymore from collection companies. It shows up in my credit report as delinquent credit. I can’t afford to pay it back, I’m sure the fee’s it accumulated are ridiculous. How long is it going to show up on my record and effect my credit report? Would it be better to file chapter 7 so I start repeating my credit faster, The loan amount left was around 10k. If you have any advice it will highly appreciated.

    Thank you in advance.

    • Robert Weed

      Robert Weed

      September 11, 2014, am30 10:20 AM
      118

      Hector:

      You should definitely talk to a bankruptcy lawyer in your area.

      You’re right that $10K deficiency on the car repossession if probalby close to twenty by now with interest. There’s a good chance somebody will sue you on it at some point, especially if you try to improve your credit on your own.

      The repo will stay on your credit for seven years–that’s four more. Around here, people three years after a bankruptcy are able to get car loans at 6.9% or better. What did you pay last time you bought a car?

      Now there may be reasons why you shouldn’t file bankruptcy, too. That’s why you need to talk to a lawyer and go over your complete situation before you decide.

  • Kat

    September 22, 2014, am30 6:26 AM
    119

    My attorney is about to file the petition for my bankruptcy which the date should be sometime in Oct. My mom has graciously offered to buy me a much needed car. Can I put the car in my name and do I need to notify the bankruptcy attorney this is happening even though I am not paying for the car? Or should the title go in her name until after the bankruptcy?
    Thank you.

    • Robert Weed

      Robert Weed

      September 22, 2014, am30 10:20 AM
      120

      Kat:

      Ask your lawyer. You definitely need to notify your lawyer and find out the best way based on the laws in your state.

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