Final 2 Months!

[VolFan]

Hi All,

I earlier responded to Barbisi in her thread about the New Year, and thought I should probably post something for a change. I’ve been a lurker here since late 2015 when I knew I had no choice but to file, but I rarely post; however, I’ve read a ton and learned from everyone, and felt I should at least share my story.

I ultimately filed Chapter 13 in February, 2016, ending up in a 5 year plan with a payment of just under $3000/month. I would have been in a 100% plan and could have been done earlier, but large student loans put an end to that dream. On a positive note, the BR has made a significant dent in the remaining amount owed on my student loans, so that’s a bonus.

The years haven’t been easy, but I was fortunate to start with a great attorney and did a lot of reading and searching the internet before I filed. While my attorney didn’t actually come out and tell me to purchase a new car prior to filing, it was something that was strongly implied in our initial conversation. I’ve read plenty of stories (then and even now) of peers who have struggled with old/unreliable vehicles, and am grateful for his advice and that I was still (financially) in a position to get something new about 3 months before filing. I also purchased an extended warranty that would cover the entire period of BR, so other than a new set of tires and regular oil changes there has been no expense there. Just before Thanksgiving I did have to purchase a new kitchen stove, but no other surprises, which I believe has allowed me to be successful in my plan. I’ve also been blessed to keep employment during the COVID-19 pandemic, which was a real worry earlier this year.

So today, with only two months remaining, I can see the light at the end of the tunnel (well, to be fair I’ve been seeing it over the past year, but afraid to believe). I will still have some remaining student loan debt, but otherwise I’m completely debt-free, and it’s a great feeling. My car is still running well and I’m hopeful for many more reliable years, so for now I will continue to drive it and save most of my plan payment. I am also planning to obtain a mortgage some time in the near future, but with the current housing market it’s a tradeoff between excessively high home prices vs low interest rates, so that’s a wash right now.

Anyway, just wanted to share my story and wish the best of luck/successful plan completions to everyone here.

[shipo]

As the locals up here in New Hamster say, "Wicked smaaat!"; what did you choose as your "Chapter 13 car"? Had I been smart, I was not, and followed my attorney's advice, I would probably just have opted for something simple like a Corolla, which, while not even remotely exciting, would have had a nice resale value at the end of the Chapter 13. But no, like you alluded to; I entered my bankruptcy with a 2001 Honda Accord which did not survive my 5-year plan.

[VolFan]

Well, I'm a car nut and my attorney knew it, so he said something along the lines of "all my smarter clients make sure they get a new car before they file," but he went on to talk about how the trustee frowned on anything considered a luxury brand, it couldn't have a payment of more than $540/month (I believe that was the federal car allowance at the time), etc.

Since I need AWD to get out of my driveway when it snows, and we have a decent amount of snow here, I bought a 2015 Subaru Legacy in late October 2015. F0und it new at a dealer about 2 hours from my house, and it was priced lower as they were trying to get rid of it since all the 2016s were in. Even with the extended warranty included my payment came to about $530/month - it couldn't have worked out better.

Interestingly enough, the trustee pays all the secured claims first, so the car was paid off and Chase sent me the title in April, 2017. It will be a nice to drive without a car payment for a while.

[sophieanne]

Congratulations on being right at the end of your plan..it’s such a wonderful feeling when you make that last payment. You will suddenly feel you just got a big pay increase...and don’t have to give it away. Being out from the majority of your debt is going to feel great! Good luck as you make those last 2 payments and reach the finish line.

[shipo]

VolFan, we have a lot in common; I'm a car guy as well (and an engineer who's worked for three different manufacturers in a previous version of my career). In my case, I had purchased an old 2001 Accord intended for my daughter's first car, however, when our financial world collapsed, I sold my car and started driving the Honda. When it succumbed to corrosion and rust during my fourth year of my Chapter 13 I managed to find a 2006 Acura TL with a 6-Speed manual which I have since gone through and refreshed mechanically. Even though it is now 15 years old and has over 170,000 miles, it is as clean and mechanically sound as new(ish) car; in fact, now that I can go out and buy pretty much any new car I want, I'm thinking to keep it for the long haul.

[VolFan]

I really like Acura products, and I think that generation TL was one of the best vehicles they've made. And finding a rare one with manual is icing on the cake - no wonder you want to keep it.

[Barbisi]

Wow VolFan you're nearly free!
I was able to pay off my student loans in 2012 so they never factored in to our plan payment.
I wish we had prepared better by buying a new car before we filed.We only met our lawyer the day we filed,although he did mention then that we should have purchased another vehicle.
Shipo we will look in making our last payment a little early as you did -of course with our less than stellar lawyer and unenviable trustee it may not turn out as well as it did for you LOL!
Hopefully we will be allowed to ditch our 18 year old car in 2022. (2005 Sentra bought in 2004).
You did everything right, VolFan and now you will reap your rightful rewards! Congratulations!

[flashoflight]

The years haven’t been easy, but I was fortunate to start with a great attorney and did a lot of reading and searching the internet before I filed. While my attorney didn’t actually come out and tell me to purchase a new car prior to filing, it was something that was strongly implied in our initial conversation. I’ve read plenty of stories (then and even now) of peers who have struggled with old/unreliable vehicles, and am grateful for his advice and that I was still (financially) in a position to get something new about 3 months before filing. I also purchased an extended warranty that would cover the entire period of BR, so other than a new set of tires and regular oil changes there has been no expense there.

I wish it was common knowledge that chapter 13 filers need at least one new(er) vehicle in the driveway. There are a lot of things that the BK attorneys won't tell you unless you bring it up first. My attorney is no different. But yeah, all that reading and searching on the Internet prior to filing makes the BK a lot easier. I still didn't know everything going in, but I knew enough since the attorney filled in the holes when I told him what I was thinking about doing.

[justbroke]

I wish it was common knowledge that chapter 13 filers need at least one new(er) vehicle in the driveway. There are a lot of things that the BK attorneys won't tell you unless you bring it up first. My attorney is no different.

At least from 2005, when the new law was enacted, and at least 2012, most attorneys were afraid to "encourage" debtor to incur new debt. There is some language in the BAPCPA (2005) that would make a BK attorney a "debt relief agency" under the law. That meant that they couldn't encourage or tell a debtor to incur debt without violating other parts of the law. In 2008 that was ratified by SCOTUS (Supreme Court of the United States) in a unanimous decision affirming that a BK attorney is a debt relief agency, with a caveat.

Prior to that decision, attorneys were very cautious when advising and avoided telling a debtor to go run and buy a new car (incur debt) on the eve of bankruptcy. Some will likely say "I can't tell you to buy a new car, but a new car would be a good thing to last throughout the Chapter 13" (or somesuch). However, that 2008 SCOTUS decision opined that the section of the code which prohibited a debt relief agency from advising a debtor to incur debt, may not apply in all situations.

I think some Chapter 7 and Chapter 13 attorneys may still be shy away because it's a fine line. If you actually need a new car and will endure a 5-year Chapter 13 with an unsuitable vehicle, that may be okay. But buying a car just to up your deductions on the means test... may not be suitable.

Example, you're about to file a Chapter 7 and have $450 in disposable income but you own a car outright. Your attorney says to go buy a new car with a $500/month payment with a 7-year warranty so that it eats up the disposable income. Is that acceptable? It's a fine line.

At least, that has been my observation. I think that for Chapter 13s, it should be easy/easier to articulate the reason to incur debt -- buying a new vehicle -- prior to filing. I bought a new car to replace an old/failing vehicle just weeks before filing. I fully understand the Chapter 13 issues with surviving 3-5 years with the same vehicle (and no warranty)!

[VolFan]

.... I think that for Chapter 13s, it should be easy/easier to articulate the reason to incur debt -- buying a new vehicle -- prior to filing. I bought a new car to replace an old/failing vehicle just weeks before filing. I fully understand the Chapter 13 issues with surviving 3-5 years with the same vehicle (and no warranty)!

In my case it was also something I'd researched before-hand, so I read up on it and also asked my attorney, which he essentially confirmed. My current car was a lease, and I absolutely had to have a car for the duration of the BR. There was no way I wanted to end up 2+ years into everything and then be trying to get a car loan in an active Chapter 13.

[Carmella]

Congrats on approaching the end of this journey. I wish I was more educated upfront. I was am emotional wreck and even though I have been on many forums I did not think of searching for a BK forum until AFTER we filed. The emotional end of it for me really fogged my thinking and my spouse has high anxiety and it's still difficult to communicate everything with him. I do my research on my own, find a solution or possible solutions then talk to him which has been very hard not to have someone I can discuss things with--and the stigma of BK, haven't told even any friends, well that's a lie I did tell one friend, but she passed away just over a year ago.

The car is very important and I did end up buying a new car while procrastinating to file because the previous car died unexpectedly. I am glad I have that 2017 car now, we filed in 2018.

[VolFan]

Thanks everyone for the replies and input.

I just wanted to say that my biweekly payment from 1/15/21 finally cleared the TFS website, so I was able to adjust my payment schedule to monthly; my FINAL month payment in its entirety will be pulled from my account on February 1, 2021 (thanks, shipo, for the early payment advice).

It should get to the trustee's office by 2/8 or 2/9, and I'm hoping that soon after I get my notice of final payment. I've already discussed it with my attorney, and as soon as he receives it his office will send out the "domestic obligations" form for me to sign/send back. Once that happens he will file it with the court and there's nothing more for me to do but endure the interminable wait for the discharge.

I can't believe the 5 years is almost over...

[Manup]

Congrats VolFan, that has to be a great feeling.

[shipo]

Congratulations VolFan!

[sophieanne]

Congratulations!! What a wonderful feeling!! Be patient as everything closes and enjoy your well deserved new freedom!

[Scottowl]

Congrats, VolFan! that must be a tremendous feeling.

I took my age and health for granted when I filed, expecting them to not give me grief.
I am ok being able to keep my cars running. I can't say the same for my body.

All the best on your fresh start!