buy a new car ??

[larryrose]

First thank you for all the info. There is a great deal of info on this site that has been very helpful so far. I've talked to 2 att and plan to visit 2 more before making a decision.
I have several question:
1. If I can get financing on a car can this payment go into the chp 13 plan? I am currently driving a 9 yr old car with 150,000 miles. I wouldn't expect this to last for 5 years. Should I wait about 3 months after purchasing a car to file and does the payments have to be late to be included in the plan.
2. On schedule J can you put down what you actually spend if it is considerably under the standard allowed? The reason for this question is to get the schedule J numbers low enough to be able to meet a 13 payment. I would qualify for a chp 7 but am trying to keep my house and small business.

Kentucky resident
income: 22,000
cc debt: 60,000
home mort: 74,000 home value 117,000
value of non exempt assets approx 40,000

Thank you.

[BigJohn]

To keep your business, you probably will have to pay the 'low' value of your business within the plan. What kind of bussiness?
As for a new car, this depends upon your lawyer a lot. If the lawyer is really good, he probably will want the vehicle in the plan and hopefully will work some magic so you will be paying considerably less for the vehicle. The vehicle will off set your patment to the trustee. I would not be surprised you get a 36 month plan and the plan pays only the value of the business, a reduced value on the vehicle, the rest of the lawyer's fee and the Trustee's fee.
What State are you in?

[larryrose]

I'm in Kentucky.
business: retail store value of inventory & displays 20,000. fire sale value maybe 15,000.
home equity: 43,000 which 20,200 is exempt leaving approx 23,000 that will have to be paid in a 13.

1st att told me I wouldn't have to payback anything on the business.
2nd att told me I would have to payback about 40,000 with a payment of approx 565 mo.

I did not mention buying a car to either att because I knew I would not have enough money to make the chp 13 payment and a car payment. Then last night I started wondering if it would be possible to get a car and put the payment in the chp 13 plan and if so would that be considered fraud or would I have to make the payments for 3 months before filing.

[optimistic1]

You most likely could get a new car before filing, but the idea of it being put into the plan is highly unlikely, unless you are behind on the payments, but you wont get a cram down on it. You need the new car so that you dont have anything arise during the plan, like unexpected expenses to fix an old car. You will most likely just continue paying for it, outside of your plan.

[larryrose]

senerio 1:
I buy a car for 15,000 at 15% interest for 5 years and make the payments for 5 years and have a five year old car. But then I can't file chp 13 because I can't make payments on a 13 and a car payment.
senerio 2:
I buy a car for 15,000 at 15% interest for 5 years and make 2 payments then miss 2 payments, file chp 13 and have the payments put in the plan. Now my plan is making my car payment because it is secured, paying my att, and paying the trustee their %. At the end of 5 years I still have a 5 year old car that is paid for and the CC debt is discharged.
Is senerio 2 possible or am I missing something? Are there pitfalls that will make this impossible?

[optimistic1]

If you are paying an arrearage on a car note through the plan, you may also have to make the current payment through the plan. The same is true of other secured property for which you are using Chapter 13 to make up an arrearage.

I dont see your thinking on how it is somehow different, either way, you will still be making a payment to the car note, I dont see how having it in your plan makes your plan more justifiable or affordable, as opposed to having it outside your plan, in fact having it in your plan makes you pay more monthly. If you are stating that you have $40,000 worth of non-exempt assets, then your creditors are entitled to receive that in your plan, add 10% for the trustee and your remaining attorney fees, now your at $47,300. Your payment for just that at 60 months is $788

Use this tool to determine your expenses, then subtract that from your average monthly income. See what you have left, if its less than $788, you need to re look at your expenses and make cuts, if the cuts are at the point where it looks like you cant even live well, then you might not be able to propose a feasible plan.

http://www.ca-bankruptcy-attorneys.com/calculators/expense_calculator.html

[larryrose]

current trustee fee is 3.2% in ky.
My understanding was that if I was required to payback 40,000 the following would be the order of payback
1. trustee fee
2. attorney fee
3. secured debt (car loan)
4. unsecured debt (credit cards)
with the total being 40,000.
Is this incorrect?

[larryrose]

Are there any Kentucky filers on this forum

[aces67]

IDK. We filed a 7 and when the trustee converted it to a 13 we had 2 car payments and neither one could be included in the plan. They said if we were behind then those payments could be included but not future payments.

However, my cousin's filed BK and their lawyer told them to buy a new vehicle before filing. They did and the amount of the car payment went into their monthly expenses. It ended up lowering the amount of their BK payment b/c it lowered their disposable income.

[optimistic1]

Ok,

retail store value of inventory & displays, fire sale value maybe 15,000, = non-exempt

home mort: 74,000 home value 117,000, equity = 43000 - 5000 exemption, = 38,000 = non-exempt

In a 13, you must pay your creditors the amount they would receive if you filed a Ch.7, and if you have non-exempt assets, then you either pay them what they are worth, or you give up the property to the trustee to sell.

So, based on your case, you own a home, and after the homestead exemption of 5000, you have 38,000 in equity, that amount is incorporated into your plan.

Then add in all of your non-exempt business property at your fire sale value of $15,000, unless some of it can be exempted under personal property, but I don't see that being likely.


So my initial numbers were wrong, your right the trustee fee in Western Kentucky District is 3.0%.

So take the 38000 + 15000, = 53000, then add your remaining attorney fees at approx. 2500, 55500 then add 3% for trustee fee which is 1650, now you have 56650, divide that by 60 months and that is your payment, which is $944.

Figure out what your monthly income is, and then subtract the $944, and then spread it out for your expenses to see if it is feasible.

Based on your figure of $22,000 of income, I dont see how you could possibly afford a plan, with paying for your mortgage, a new car, and all of your living expenses. A Chapter 7 might be just for you, and unfortunately, you might have to give up the house.

Is your income figure an annual gross figure?'

The home exemptions for Kentucky are as follows.

Homesteads:

Homestead

$5,000

* The exemption for a homestead is limited to $125,000 if the property was acquired within the previous 1215 day (3.3 years). The cap is not applicable to any interest transferred from a debtor's previous principal residence (which was acquired prior to the beginning of such 1215-day period) ;
* The value of the state homestead exemption is reduced by any addition to the value brought about on account of a disposition of nonexempt property made by the debtor (made with the intent to hinder, delay, or defraud creditors) during the 10 years prior to the bankruptcy filing.
* An absolute $125,000 homestead cap applies if either:
o the court determines that the debtor has beeen convicted of a felony demonstrating that the filing of the case was a abuse of the provision of the Bankruptcy Code; or
o the debtor owes a debt arising from a violation of federal or state securities laws, fiduciary fraud, racketeering, or crimes or intentional torts that caused serious bodily injury or death in the preceeding 5 years. NOTE: This limitation is inapplicable if the homestead property is "reasonably necessary for the support of the debtor and any dependent of the debtor."

[larryrose]

Thank you for the replies
If I am understanding correctly the car payment would be in addition to the 40,000 I would have to payback to unsecured creditors. This would make my payment too high. I probably couldn't get a car loan anyway.

The second half of my question was about sch J. I spend very little on home maintenance and very little on groceries, laundry, etc. Will a trustee believe this or will he try to dismiss the 13 based on not enough income? Is this even an issue?

[optimistic1]

You spend what you spend, some people spend more than others, some spend less, if it sounds realistic, then it should be ok. Put it this way, my father in law is on social security, and is disabled. The govt gives him food stamps in the amount of $110 a month, and somehow, he makes it last. Just because the IRS standards say its normal to spend about $600, it doesnt mean that you do, it would be more abnormal and raise an eyebrow if you were spending more than what is reasonable.

[larryrose]

thanks

[lrprn]

If I am understanding correctly the car payment would be in addition to the 40,000 I would have to payback to unsecured creditors.

Where are you getting that you would have to pay your creditors back $40K?

When you file Ch 13, even though your trustee would probably not be making the new (to you) car payment 'inside' your plan, the car payment would still be taken into consideration when determining your disposable income level, crammed down or not.

The second half of my question was about sch J. I spend very little on home maintenance and very little on groceries, laundry, etc. Will a trustee believe this or will he try to dismiss the 13 based on not enough income? Is this even an issue?

Ch 13 trustees question things that seem out of average for your area. They do not question low amounts, only higher ones.

Discuss what you've been spending during your 3-4 free initial consultations with lawyers in your area. Experienced Ch 13 lawyers are going to tell you to put *realistic* average figures into your plan even if you've been spending less.

Five years is a LONG time to scrimp doing without as you have been up to now. This is where a well-designed Ch 13 plan builds in a little "wiggle room" to get you through the tough spots that inevitably happen over five years. No one is going to give you a blue ribbon or congratulate you for getting by on less than you realistically should.

Your trustee could care less if you severely underestimate what's needed for a minimal life over five years when you file your plan. Allow your lawyer to help you set your expenses to something reasonable. This is often the difference between a Ch 13 plan that succeeds and one that eventually fails over time.

[larryrose]

Irprn
Thank you for your input.
I will have to payback the value of assets over the amounts that are exempt. This is why I say I will have to payback approx 40,000. The last att I talked with quoted a payment of approx 575. Now if my gross is 2000 per month and you deduct a payment of 575 I will have 1425 left to pay taxes and to live on for the month. 1425 is well below the normal standard of living so I wanted to know if the trustee will question this and perhaps dismiss the ch 13 because I don't have enough income.
From your post I gather most trustees are only interested in high expenditures so I have nothing to worry about.
thanks