Spouse has too many tools/vehicles!

[EmptyBottle]

My spouse and I have separate debt. I'm filing Ch7. He wasn't going to file - but circumstances have changed his mind and he's agreed to file.

I'm doing a Ch 7 (we have separate accounts - only mortgage in both names and that's up to date) and I'm looking and thinking he's going to have to do a Chapter 13.

He's a mechanic and has thousands of dollars in tools which is required for his job. No tools = no job. We're in PA and from what I can see, PA has NO tool exemption.

He also has several motorcycles. He'd rather get rid of me than them. We did try to sell 2 of them, but no takers for a remotely fair or even semi fair price. So if he wants to keep the tools and motorcycles, makes sense that he'd have to go Chapter 13. Gotta pay the piper. PA's exemption for vehicles seems to be about $2775 and our two cars/trucks take that up and then some. What about his motorcycles? Some are in both names, some are just in his name.

My question is this: When the atty was doing my paperwork, we're in the red each month as far as disposable income. How does ... or can a Chapter 13 even work if you don't have disposable income?? Would he have to file a Ch 7 and lose his tools and motorcycles? Or is disposable income somehow figured differently when doing a Ch 13?

Thanks for any insights... I've been going from bankruptcy site to site and searching for hours, but I can't find info on not being able to do a Ch 7, yet not being able to afford a (or much of) a Ch 13.

-EB

[AngelinaCat]

Hi EB: welcome to the forum. You have a very serious matter here. I don't know that the both of you can file independent chapters of BK and have the mortgage in both names.

I do know that my 'Hub and I tried initially to do a Ch13, with very little disposable income. The pre-filing credit course counselor--we went to a live person--was the one that told us with our income and outgo, we were better suited to a CH7. It was only when I lost my FT job, that we realized we had no choice but to go Ch7.

We had too many things that were not covered by exemptions. Florida is one of the states that has no real meaningful exemptions other than the homestead. 'Tools of the trade' are not allowed, so 'Hub, as a Computer Consultant, got to buy back from the BK Estate, his computer equipment, parts, and test fixtures that he uses to try to fix customers' computers. There were other things we had to purchase back also. And we had many uphill battles and very little guidance from our BK lawyer. We made almost every kind of mistake possible to make and NOT get dismissed.

Nor did we learn of this wonderful forum, until well after we had filed and were hit with an Adversary Proceeding.

But we stuck with it and kept putting one foot in front of each other, day by day. Our BK journey started August 2006. We filed Ch7 December 28, 2007; had the 341 February 7, 2008, were ruled an Asset Case March 2008, Discharged on August 13, 2008, and finally Closed on November 3, 2009.

We made it, and so can you!!!

[justbroke]

You're in a tough place when you have both joint and individual debt, along with living in a State with bankruptcy exemptions that are not too kind to the self-employed or those requiring tools for their trade. You could use the Federal Exemptions and it does provide a tools of the trade exemption.

My question is this: When the atty was doing my paperwork, we're in the red each month as far as disposable income. How does ... or can a Chapter 13 even work if you don't have disposable income?? Would he have to file a Ch 7 and lose his tools and motorcycles? Or is disposable income somehow figured differently when doing a Ch 13?

Yes, even my calculation has me in the negative for DMI ($-400 or so). This means you have to balance some of your budget items. Can it be done, yes. However, it puts a Chapter 13 person at a disadvantage when you're already negative, so you need to be more cautious with spending.

I don't know how far you've gone with the attorney, but look to the usage of the Federal Exemptions. This may give you more in exemptions, especially if you file together and douuble the exemptions. Are you keeping your home?

[andy158]

I had a motorcycle and a boat when I filed and the atorney said any "pleasure" vehicles (toys) would be frowned upon to keep in a bankruptcy. Even if they are paid off. I owed money on them. Had about half paid off, but had to surrender them. Repo man came in Januray for the motorcycle, but I haven't heard anything on the boat.

If your bikes are owned free and clear, that may be another situation if you can show they are primary means of transportation. However, we had four vehicles and were told to get rid of one. Too many vehicles for exemption allowance. That may be your case also.

As far as the tools, if they are paid 100%, that is what is going to pay for the bk13 correect? They should be considered assets for income purposes.

[EmptyBottle]

Hi EB: welcome to the forum. You have a very serious matter here. I don't know that the both of you can file independent chapters of BK and have the mortgage in both names.

I do know that my 'Hub and I tried initially to do a Ch13, with very little disposable income. The pre-filing credit course counselor--we went to a live person--was the one that told us with our income and outgo, we were better suited to a CH7. It was only when I lost my FT job, that we realized we had no choice but to go Ch7.

We had too many things that were not covered by exemptions. Florida is one of the states that has any real meaningful exemptions other than the homestead. 'Tools of the trade' are not allowed, so 'Hub, as a Computer Consultant, got to buy back from the BK Estate, his computer equipment, parts, and test fixtures that he uses to try to fix customers' computers. There were other things we had to purchase back also. And we had many uphill battles and very little guidance from our BK lawyer. We made almost every kind of mistake possible to make and NOT get dismissed.

Nor did we learn of this wonderful forum, until well after we had filed and were hit with an Adversary Proceeding.

But we stuck with it and kept putting one foot in front of each other, day by day. Our BK journey started August 2006. We filed Ch7 December 28, 2007; had the 341 February 7, 2008, were ruled an Asset Case March 2008, Discharged on August 13, 2008, and finally Closed on November 3, 2009.

We made it, and so can you!!!

Thanks for taking the time to respond to my post. =-)

Wow.. you have had a long road with your BK.... thanks for sharing your story!

-EB

[EmptyBottle]

You're in a tough place when you have both joint and individual debt, along with living in a State with bankruptcy exemptions that are not too kind to the self-employed or those requiring tools for their trade. You could use the Federal Exemptions and it does provide a tools of the trade exemption.

Yes, even my calculation has me in the negative for DMI ($-400 or so). This means you have to balance some of your budget items. Can it be done, yes. However, it puts a Chapter 13 person at a disadvantage when you're already negative, so you need to be more cautious with spending.

I don't know how far you've gone with the attorney, but look to the usage of the Federal Exemptions. This may give you more in exemptions, especially if you file together and douuble the exemptions. Are you keeping your home?

Our home is paid for in about 7 years so we want to keep the home. The atty who I retained in December said keeping the house wouldn't be an issue, which I haven't figured out yet, but I'm not an atty. She's been a little hard to pin down lately so I'm at a loss. But then it was just ME filing.

-EB

[EmptyBottle]

I had a motorcycle and a boat when I filed and the atorney said any "pleasure" vehicles (toys) would be frowned upon to keep in a bankruptcy. Even if they are paid off. I owed money on them. Had about half paid off, but had to surrender them. Repo man came in Januray for the motorcycle, but I haven't heard anything on the boat.

If your bikes are owned free and clear, that may be another situation if you can show they are primary means of transportation. However, we had four vehicles and were told to get rid of one. Too many vehicles for exemption allowance. That may be your case also.

As far as the tools, if they are paid 100%, that is what is going to pay for the bk13 correect? They should be considered assets for income purposes.

All of our vehicles are paid off. My husband's main vehicle would be his motorcycle(s). We own some of the motorcycles jointly - others just in his name . When I listed the ones that are jointly owned on my BK papers, the atty didn't say anything about them being pleasure vehicle or about losing them.

We have an SUV (14 years old) a truck 20 yeas old and a car that's 16 years old and is stuck in our driveway. So the motorcycles are the more valuable of the vehicles (newest is 2007, oldest is early '70's). The 2007 vehicle was paid for by a loan on a 401k, so I wonder if that's 'protected' somehow since the funds are 401k??

Thanks!
-EB

[EmptyBottle]

I had a motorcycle and a boat when I filed and the atorney said any "pleasure" vehicles (toys) would be frowned upon to keep in a bankruptcy. Even if they are paid off. I owed money on them. Had about half paid off, but had to surrender them. Repo man came in Januray for the motorcycle, but I haven't heard anything on the boat.

If your bikes are owned free and clear, that may be another situation if you can show they are primary means of transportation. However, we had four vehicles and were told to get rid of one. Too many vehicles for exemption allowance. That may be your case also.

As far as the tools, if they are paid 100%, that is what is going to pay for the bk13 correect? They should be considered assets for income purposes.

My husband needs his tools - so he doesn't want to part with any of them (I know.. no one wants to part with anything...) but like I said no tools = no job... it's strange how PA doesn't care about tools of the trade. But yeah, the tools are paid for 100%. Tools and bikes are owned free and clear - at least for the time being.

Do they consider tools as jointly owned since they were purchased during the marriage? I'm wondering if I go ahead and file in the next 2 weeks (as planned) what will happen if he files - after I'm discharged? Or before I'm discharged? Does it matter? If he files after I'm discharged, would it matter if he chose the Fed exemptions over PA exemptions?? (atty said I'm doing PA Exemptions).

Wishing my atty was a little more accessible... she was accessible initially.. but I guess is very busy with other cases, so getting a response from her is hit/miss.

-EB

[markdel16]

Curious as to why you would use the PA State exemptions over the Fed. The Fed exemptions are much more generous.

[EmptyBottle]

Curious as to why you would use the PA State exemptions over the Fed. The Fed exemptions are much more generous.

Not sure.... but that's what atty said... I thought it was because of tenants entirety (pa code) and that saves the house since it's in both names and the debt is only in one name or the other (aside from house) and we've a bunch of equity in the house (around 100,000).

-EB

[justbroke]

The reason your attorney stated may be correct. Seems like you have a very large amount of equity. Protecting the equity may be worth having to "buy" the tools back from the Trustee.

[AngelinaCat]

The 2007 vehicle was paid for by a loan on a 401k, so I wonder if that's 'protected' somehow since the funds are 401k??

No. You took an exempt asset--your retirement funds--and used it to purchase a non-exempt asset.