Third Car

[meetsv]

Good Afternoon,

I'm schedule to file for Chapter 13 in the next couple weeks. I have three cars in my household. I interviewed three Attorneys and only one of them stated that the trustee would not let me keep a third car. So, my question is if that is the case should I stop paying the payments on my third car? I'm in the state of Arizona.

Thank you for your advise in advance.

[HHM]

Do you have a 3rd licensed driver in your house that routinely drives the car?

If not, the trustee will probably object to the "expense" (that is, the car payment). That doesn't mean you necessarily surrender the car; if the payment is relatively low, your attorney should be able to pad the budget enough to allow you to continue making payments if you want. But, if you really have no good reason to have 3 cars, you should probably let one go.

[meetsv]

HHM,

The third car is usally driven by my daugther, she is a senior. I would not mind if I have to return the car. The payment is $712. If I have my choice I would like to keep the other cars with lower payments.

[StartingOver08]

HHM,

The third car is usally driven by my daugther, she is a senior. I would not mind if I have to return the car. The payment is $712. If I have my choice I would like to keep the other cars with lower payments.

I have to ask this...what kind of car is this????? $712/mth - it must be a Porsche!

[justplaintired]

I would say in this case, I would let the car go. That is a very high car payment and a teenager probably shouldn't be driving around in a car that cost that much. You know some teenagers drive cars that cost as much as 1 month's car payment on that car. I am also curious, What kind of car is this?

[HHM]

I concur, dump the car. The Trustee will never allow that much of a car payment (unless you are in a 100% payback chapter 13, and even then, it is a stretch). No amount of budget padding can absorb $712 per month.

Keep in mind, the IRS allowed ownership cost per month for 2 cars is only $978 per month (combined).

[meetsv]

It is a Chevy Avalanche, I was way upside down on my last vehicle (the one I trade in for the Avalanche), if I let it go or stop payment, what that would do to my disposable income.

[HHM]

It is a Chevy Avalanche, I was way upside down on my last vehicle (the one I trade in for the Avalanche), if I let it go or stop payment, what that would do to my disposable income.

Strictly speaking, nothing, because the trustee isn't going to allow the expense anyway. So your DMI will be what it will be.

[Billssuck]

I had four cars (all older and paid off) and three drivers in our household. The fourth vehicle is a tool of the trade exemption for me as it is used exclusively for my job. We got to keep all four cars and only $4,500 in them was non-exempt equity.

[HHM]

I had four cars (all older and paid off) and three drivers in our household. The fourth vehicle is a tool of the trade exemption for me as it is used exclusively for my job. We got to keep all four cars and only $4,500 in them was non-exempt equity.

Thank you for the input, but a little off topic. Your cars were paid for, so there was no issue of an ownership expense (just exemption issues).

[justbroke]

So, my question is if that is the case should I stop paying the payments on my third car?

I'm 100% with HHM on this on all grounds. First, a $700+ a month car payment, just isn't going to pass muster with the Trustee. Even though the Bankruptcy Code allows you to keep all your secured property in a Chapter 13, your disposable monthly income (DMI) is what concerns the Trustee.

When they see you spending over the IRS allowable limits ($489/car or $978 combined as HHM writes) for two cars, you are now impacting your DMI. The Trustee and/or unsecured creditors would probably object to confirmation of your plan because you are not paying 100% or that your plan was filed in bad faith. It would be "bad faith" because you are choosing to pay over $700/month for a third vehicle when your unsecured creditors suffer. As a matter of fact, on a third car, the Trustee could still complain, even if it was relatively cheap ($200/month).

How you would normally "fix" this, is you adjust your Plan so that you contribute the car payment towards the unsecured creditors (up to 100%). If you have $700+/month to play with, you're probably already in a 100% plan.

Everything I write above, however, is moot if you ask me. If you are that upside down on that Avalanche... you should let it go, just on principle. Unless you can cramdown the value of that Avalanche (which I'm suspecting you can't because you purchased it less than 910 days ago), it just isn't worth it financially.

[meetsv]

justbroke,

You are correct, the vehicle is less than 910 old, so the advise of some of you that let the car go is the best option I have. Thanks for all your help.

[meetsv]

Thanks everybody for your advice. After letting the car go back to the bank, I find it hard to make it with two cars. I work 60 miles away (one way), my daugther drop of my wife to her work in the way to school. So that leaves my wife at work with no car, if something happen to other kids, she is stuck with no car and no way to pick up the other kids. I guess I did not judge my situation correctly, I will post the question to my lawer today, but I wanted some advice from this board first, can I get a cheap used car for the family before filling?

Thanks for the advice

[justbroke]

Thanks everybody for your advice. After letting the car go back to the bank, I find it hard to make it with two cars. I work 60 miles away (one way), my daugther drop of my wife to her work in the way to school. So that leaves my wife at work with no car, if something happen to other kids, she is stuck with no car and no way to pick up the other kids. I guess I did not judge my situation correctly, I will post the question to my lawer today, but I wanted some advice from this board first, can I get a cheap used car for the family before filling?

Speak with your lawyer. Letting the Avalanche fall like an avalanche, was the best thing, trust me. Now, as for getting another car for the household, work with your attorney. So long as you and your Plan can afford it, you can probably work it in. Remember, the Trustee may gripe but your attorney will be able to guide you through that process.

The Avalanche just stuck out like a sore thumb... with it's monthly payment. Perhaps a used car will do.

What does the daughter do? Why does your wife come secondary to your daughter? I'm wondering why you're not getting grief from the wife already.

[lrprn]

What does the daughter do? Why does your wife come secondary to your daughter? I'm wondering why you're not getting grief from the wife already.

GMTA, jb....I'm thinking the same thing.

Meetsv, why isn't your wife dropping your daughter off at school, and then having the car for the day in case of an emergency with your other children?

As already said, talk to your lawyer about finding a decent, reliable used car for your third licensed driver before filing.