New 13 filing questions

[bxpete]

This is my first post here. I appreciate any feedback you can provide.

We're considering filing a ch13 sometime in the next 6-12 months, and I've got a few questions:

1) I've got 5 cars financed in my name right now (one for myself, my wife and each of my grown kids). My kids' cars are all financed in my name completely, and they pay me their monthly payments in cash, and I turn around and pay the finance companies. My question is - how would this be treated in a 13? Will I only be allowed to keep my "own" 2 cars, an be forced to get rid of the other 3 that belong to my kids, or does a 13 allow me to keep all assets as long as I can make the payments in the budget? On a side note - should I even tell the attorney that the extra 3 belong to my kids and they make the payments, or should I just say that I make the payments on all 5 to help lower my "disposable income"?

2) Second question - I make a lot of money (150-200K range depending on bonuses, stock, etc). When calculating the disposable income for the monthly 13 payment, will my profit sharing bonuses and stock option sales be included in my 6 months' income averaging, or does it only include base pay, and not bonuses? I don't expect a bonus this year at all, so I'd hate to have my income calculated WITH the bonus and then not get one this year. If bonuses and stocks are included, I'll probably have to wait longer to be sure the last bonus fall outside of the 6 month window.

Thanks in advance for any advice you can provide...

[Flamingo]

You need to tell your attorney everything since the vehicles are all in your name....note that your childrens' income will be included in your total household income since I am assuming you claim them as dependents on your tax returns. Bonuses, profit sharing, stock options, etc. will be averaged into your income for the six month period prior to filing. You will have to provide pay stubs and other income information for at least six months to one year prior to filing (we had to provide one year) and also prior years tax returns.

It would not hurt you to have a consultation with a BK attorney to find out what you can and cannot do at the moment as to filing.

[justbroke]

Flamingo is always great! I would only add that I wish I did some pre-Bankruptcy planning myself. (For example, I'd still be in my residence right now... saving some $16K... oh well.)

Your lawyer will help you figure out how to maneuver through Bankruptcy. You have a special case, so make sure you get a lawyer who does Bankruptcies for a living... don't use the family lawyer.

[bxpete]

Thanks for the info.

Flamingo - my kids are all over 18 now and out on their own, so they're not listed as dependents on my tax returns and would not be considered dependents for income purposes.

Do you know if there's a "limit" to the number of cars that can be included in a bk13? I'm wondering if I could claim that they're all mine since they're all in my name (loan docs and registration also). This would help increase my monthly expenses and lower my disposable income...

[justbroke]

Do you know if there's a "limit" to the number of cars that can be included in a bk13? I'm wondering if I could claim that they're all mine since they're all in my name (loan docs and registration also). This would help increase my monthly expenses and lower my disposable income...

The answer is 2. This is a function of law. To clarify, the IRS National Standards only allow for 2 cars.

(This is a simplification) If you keep more than two cars during your Chapter 13, and you are paying for them (have liens on them) this isn't going to work unless you are paying all your unsecured creditors 100% during the plan. Otherwise, there will certainly be a good faith objection to your plan.

This is because no Creditor is going to sit by why you pay for 5 cars, when they aren't getting paid. The law only allows for (exempts) 2 cars. Any other cars that have loans on them would require the Debtor to pay those hungry Creditors 100%.

[bxpete]

Makes sense, and sounds like I'll have to consider a 100% plan.

Thanks.

[Flamingo]

Thanks for the info.

Flamingo - my kids are all over 18 now and out on their own, so they're not listed as dependents on my tax returns and would not be considered dependents for income purposes.

Do you know if there's a "limit" to the number of cars that can be included in a bk13? I'm wondering if I could claim that they're all mine since they're all in my name (loan docs and registration also). This would help increase my monthly expenses and lower my disposable income...

Even though your children are grown and out of the house they are still giving you money which would be considered income since you are using it to pay a bill in your name. Even if they pay you in cash. It's traceable compared to your income, expenses and what goes in and out. Since you are high income, more attention could be paid to your possible filing and that could easily come to light. Just giving you possibilities of what could transpire here. Is there a reason your kids cannot have the vehicles in their own name and make their own payments? Insurance purposes?