Auto lease up in 1 year

[Thought Doctor]

We are seeing a lawyer in two days to discuss BK. I have two leased vehicles, need one, would like to keep other (the one that's lease is up in a year).

Obviously need a car..,who doesn't...so should I purchase a new car now, before BK and wait a while to file? How long before it isn't considered a fraudlant transaction?

I can hold out for a while before BK, and in that time may get a couple of the properties sold. that would pretty much take care of the debt problem, and BK would not be necessary. So, while I may not yet be BK, if property doesn't sell soon...

[keepmine]

If you're going to finance the car, no problems. You can just reaffirm the loan.
Don't pay cash for a car. If you do and the equity in the car is above what your state exempts, your 13 plan will be more expensive. Nothing fraudulent about lining up transportation needs.

[Thought Doctor]

thanks, since we are older and retired, we have no more "recovery time" left...so planning this is critical. A new car now will 1) carry a warranty through most of the Ch 13 and we will just figure we will have to make the agreed to full payments. I think purchase is better than lease, don't you...then it's ours at the end?

[CindyLou]

You will be in quite a pickle once your lease is up next year and you are smack in the middle of a 13. But remember, depending on what you will be paying your unsecureds...you will be paying the deficiency on this leaseed car you turn in early.

[253BK]

I would get out and buy a car quickly before any negitives go on your report! Then reaffirm the loan and you will be fine!

[Thought Doctor]

253K, That is exacftly my thought process. My credit rating is still in the 720-750 area, and I have income on disability for at least five more years. I am still upside down on the lease, but will call the leasing company (US BAnk) and ask how much ait will cost to do an early termination. Armed with that number, I will go negotiate with the dealership. I can have a new car not encumbered by a car loan (instead by the 2nd mortgage) at a pay that is $100 less a month.

I can tap into a LOC on my second mortgage to purchase. I am trying to plan ahead. I may not even qualify for a 13 and am not ready to do a 7, maybe never, as we have no fall back once we reach the magic age of 65.

I see the lawyer today...shall I reveal to him this plan? I plan on reaffirming the car loan anyway.

[lrprn]

I see the lawyer today...shall I reveal to him this plan? I plan on reaffirming the car loan anyway.

ALWAYS reveal EVERYTHING financial to your lawyer. How can he/she help you protect your interests if they don't know everything about your current finances?

You pay a bk lawyer to help you make sound financial decisions that won't accidentally derail your bankruptcy or create problems out of ignorance of the consequences - it's called bankruptcy pre-planning and it's perfectly legal. Take advantage of it!

[EveryDayAdam]

DEFINITELY DEFINITELY DEFINITELY give your lawyer EVERYTHING you know about your current situation and your concerns about having a car once your lease is up. Tell him/her the plan that you think is best, and let him/her give you their advice. You can't lose anything by telling your lawyer...that's what you are paying them for.

My guess would be, buy the car now, and surrender the lease vehicle in the BK. You may be able to "hide" some money in the purchase of your car, because you will have to buy it for more than it is worth at trade in...so, that's a good way to get rid of a couple thousand in cash or equity....and a car payment will help lower your chapter 13 payment.

You will definitely get the BEST deal by buying a car before you file for 13, because if you are in a 13 then good luck getting financing...so definitely get something (with a warranty) that will last you all 5 years.

[woeisme]

you said "I can have a new car not encumbered by a car loan ".

I would not recommend that if you are going to file. You can only exempt so much of the value of the car when you file, and if you own the car free and clear (yes, I know you will be making payments on a 2nd morgage instead) but unless the loan is secured by the car, the BK trustee will consider the car as an asset that they can go after. Look to see what your state exemptions for a car is, and make sure your equity in the car is equal to or less than that amount.

Also, look to see what amount of car loan levels are allowed by your trustee. (Don't get a car that's going to cost you $500 a month in payments if they only allow $300 per month, for example.) Again, these kinds of things need to be considered so is why it is good to discuss with an attorney.