Recommendations to use up lien strip funds?

[pcn]

So now, late in the game, our atty has recommended that we need secured credit to replace the increased payment caused by our lien strip. If we had discussed this 3 months ago before we stopped paying cc's we could have easily qualified for a new replacement vehicle. But we were thinking "no new debit" rather than planning ahead for the bk. So now out credit score is down to a 500 from a 720. Anyone recover from a similar situation? We could put a large (4-5k) down payment on a new vehicle and get a relatively high interest loan. That new payment could balance the increase in disposable income resulting from the lien strip. Maybe that's the best we can do at this point. Are there other ways to decrease our disposable income? Adding a payment seems so counterintuitive. I believe we are pretty well taken care of, regarding expenses. Can you refinance during a ch13?

[HHM]

It's a wash financially, it really does not matter. The money either goes to the BK trustee or you get a new liability.

[justbroke]

I like how HHM put it. I have a spreadsheet where I ran all kinds of numbers through. (It's my magic B22C "what if" spreadsheet.) I looked at surrendering and not surrendering and this and that.

In the end, it's all about where the money goes. You'll still be paying it.

The real question is, does getting a new vehicle help you at the end of the Chapter 13? it could be 5 years, and then you have a 5+ year old vehicle that you own outright, that's not worth what you just paid for it.

In the end, HHMs word will resonate... it's a wash, financially.

[pcn]

That was my thought as well. But if, for instance, I finance a new car, at the end of the 5 years I at least have something tangible. If I just increase the payment (through the lien strip) to the creditors, there is nothing at the end of 5 years. Am I looking at this wrong?

Edit -And during the 5 years the family has reliable transportation. That would seem to be worth something as well.

[justbroke]

Am I looking at this wrong?

Absolutely not looking at it wrong. Reliable transportation is a good thing, and I see no problem with that!

[HHM]

I am not saying don't get a car, but if it looks like it is going to be a bad deal, why lock yourself into something you can't do anything about.

[pcn]

Thanks for the thoughtful replies. The thought of going into more debt just as we are going to file somehow doesn't compute in my brain. It's most likely the best option, but going down the same path that got us into this situation is just hard to accept.

[pcn]

Back again. So if we were to finance a vehicle, wouldnt that effect the means test? and if we were close originally for a 7 couldn't it change our options? Just trying to look at all angles. The lien strip is still a reason to lean heavily toward the 13.

[justbroke]

Back again. So if we were to finance a vehicle, wouldnt that effect the means test? and if we were close originally for a 7 couldn't it change our options? Just trying to look at all angles. The lien strip is still a reason to lean heavily toward the 13.

It could. That's why I ran my case both ways... as a Chapter 7 and as a Chapter 13.