CH13 Planning. Need advise

[rbaronex]

Hi all,

I have 3 vehicles worth about 21k combined. All free and clear. This week I decided to trade in two of them for a new 2010 vehicle with warranty. The new vehicle is worth 29k, my loan balance is $20k, The third vehicle I did not trade in is worth $8k. So, I now have 2 vehicles, One worth $8k no lien hoder, and one worth 29k, with a $20k loan, leaving me with 9k equity. Total equity between both cars - $18k. My c/c debt is $84k. What will this look like at my 13 filing? I live in Arizona, I am married with 4 kids...

Thx.

Rob

[optimistic1]

You are allowed a $5000 allowance, per vehicle, per spouse, as an exemption. If your equity is only 9k, and you state that your equity is 18k. That leaves you with 9k worth of property that is non-exempt. I actually have added up your non-exempt equity to be 12k.

It means that you will need to pay your creditors whatever the value of your non exempt property is in your Ch.13 case, which would be the 12k, on a 60 month plan, it would add 200 extra per month to pay.

Your 84k worth of CC debt is a non-issue really, whatever disposable income you have will determine the % of payback to those creditors.

[lrprn]

So, I now have 2 vehicles, One worth $8k no lien hoder, and one worth 29k, with a $20k loan, leaving me with 9k equity. Total equity between both cars - $18k.

As Optimistic already posted, in AZ you get $5000 per car, doubled for a married couple who file together - http://bankruptcy-law.freeadvice.com...exemptions.htm

Let's look at your cars one by one.

Your current old car that is paid for you say is worth $8K - this leaves $3K unprotected by your AZ motor vehicle exemption. (By the way, what did you use to value the car in today's market? Some courts require using a specific source to value cars like the Kelly Blue Book.)

Your new car that is worth $29K with a $20K loan leaves $9K of equity of which $4K is unprotected by your AZ motor vehicle exemption.

This means between the two cars, you have $12,000 in auto equity that can't be protected when you file.

You essentially have two viable options here:
1. You ask to keep both cars and pay your trustee $12,000 extra over the life of your plan to pay off the unprotected equity.
2. You surrender one vehicle (I assume the paid-off older one) which will reduce your unprotected equity to $4,000 but leaves you having to find a way to replace the car during an active 13 - no easy feat.

You are in a tough spot....the best way to proceed is up to you and your lawyer. You should do whatever is going to give you and your family the best outcome overall in the long run.