Getting a car before filing

[samson420]

We will be filling for a Ch.13 in about three months. We have spoken to our attourney and he brought up a good point.

He asked about our vehicles. We currently have 2 cars both of which are 10 years old and have a fairly high ammount of miliage. Yet the cars are in great shape. But, this is a 5 year settup, and I doubt that these cars can last that long(they would be over a quarter million mile mark with the miles we drive in 5 years).

So,

One, how do I get a car with my current credit score?

Two, what will exactly happen to the financed ammount after the 13 is started and is in place?

[woeisme]

Can't help you much with question #1, basically you have to bite the bullet and probably get financed at crappy rates with bad credit.

As to #2, your payments get put inside the plan, which is great, because it reduces your disposable income, so that portion of your trustee's payment goes to paying for your secured debt (car) instead of unsecured debt (credit cards, etc.) It's possible your trustee will change the interest rates on the loan if they are too outrageous, but since you are buying the car so close to filing, the financed amount won't change. If your payments on the car are for a shorter period of time than your CH 13 BK, then the car will be paid in full during the BK and you'll own it free and clear at the end. Otherwise you'll have to keep paying what you owe on it once discharged.

[MommyMc]

We got to new (used) cars a month and a half before we filed. As our lawyer told us.... "if you're not paying the money for the car loan, then the money will go to the trustee." We were given guidelines when picking out the cars, they had to be under $30,000 each and less then a $600 payment each. We pay for our cars outside the 13.
Our credit score was middle of the road and we were able to get financing through the Ford dealership.

[samson420]

I just can not see us getting financed through anyone. We have not payed on the majority of our bills for about 5 months. We just barely started paying on our mortgage again.

[zpbk13]

We were fortunate enough to get a new vehicle before our credit totally bit the dust. We got 1.9% on a 2009 Saturn that I love. Our two car payments (own a 2005 Chevy Equinox that we are hoping to cram down) will be paid outside the plan, according to our attorney. To the OP, I wish you well on your journey to find a decent interest rate on something soon!

[HHM]

You might have a better chance getting financed after the chapter 13 is filed. Your debt ratios improve.

Question 1 is really a non-objection. You can't do anything about it. Your credit is bad...you can probably get financed but the cost of financing will be high. That won't change in the near future. If your current car breaks down, you are going to need to get a another car anyway.

Question 2. Nothing. You just keep making your payments.

[Billssuck]

Similiar situation---need advice

Hi!

We are also filing BK CH13 in about 1 month. However, we have 4 very older cars, most with high mileage and one of them is a "tool of the trade" for exemption purposes (I deliver mail in it, exclusively). Anyway, our newest vehicle (a 2003 Mailibu) has over 160K on it and I see no way that it will make it through the plan. The other two have almost that much mileage too. All four vehicles are paid off.

I was wondering about whether to buy a car before we file or to wait until after we do? Now we will be just under the median for our family size and our DMI will be very low (like $250). I don't see how we can afford a vehicle under the plan with that low of DMI either. I think it would force us into CH7 and possibly loosing our house. What are your thoughts? I think I will email my lawyer also to get his advice.

Thanks a bunch!

[samson420]

That is a tough one.

Can you afford a car payment(under 300 Dollars a month) not counting the settlement?

[Billssuck]

That's the unknown....

Not counting our settlement, can we afford a $300 payment? That's what I don't know. There are many things that could go either way in filing our bankruptcy. For instance, our 18 year old is at college and we are waiting for him to be physically under our roof to have our family size up to 4 for filing to keep us under the median. Then, the lawyer wants to try to claim my employee business expense as income (I'm disputing that though), and I just had child support end (two months ago) so a portion of that is figured into my income although I will never see that again...So basically what I am saying is that my income is hard to figure as far as the courts go. How do I feel about making a $300 payment myself? I really don't think we can afford that and the increased insurance with full coverage for a newer vehicle. A part of me says to just suck it up with the older vehicles and try to save every penny we have left over to buy another beater if need be to get us through a 3 year plan. But having cars that may or may not run when we live 30 miles from work is very hard to handle.

My husband is insisting on wanting to keep our house and that is why the 13 over a 7 BK. I think it is the reason why we can't live a normal life and have decent cars (mortgage and HELOC are about $2k/mo) when we make about $5,500.

[samson420]

Wow!. . . . .I really wish I could help, but I really don't know.

Good luck though. . . . .