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Attoreny advises me to buy a new car before Ch.13

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    #1

    Attoreny advises me to buy a new car before Ch.13

    I have only one car and my wife doesn't work and both of us share the same car. My attorney told me that my NDI could be more as I dont have any car payment and it's better to go for a car purchase or lease in my wife's name so that I can show that amount as part of my expense which will bring my NDI down.. She also told me that we can justify this purchase as 2nd car is not a luxury but a must for household of 4 people...I am planning to go for Ch.13 in the month of June or July...


    Will it be a problem to go for car purchase/lease 3 months before filing? If I go for a car lease/purchase in my wife's name and I pay for that from my income as she doesn't work, will it create any issues in Ch.13? Thanks in advance for any feedback.
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    #2
    Should be fine.

    Even though 'you' are paying for 'her' car, you're married & in one household so it makes no difference whether its you/her/both.

    Going into a 13 means you will have limited financial freedom for 3-5 years. It is smart to prepare for that. If you don't think you can realistically share 1 car for 3-5 years, then you need to get another now. That does not mean buying the newest Lexus or Cadillac - but a reasonable, reliable car is not a 'luxury' and so not a problem for the 13.

    The car will likely be included in the 13 - which means the plan will absorb the car payment. Lets say you were going to pay $1000 a month, with 1/2 of that going to unsecured. (Assuming the rest is secured/priority/atty/trustee.) With the car added in, it just means more goes to secured/priority and less to secured.
    Get mortgage modified: DONE! 7 months of back interest payments amortized, payment reduced over $200/mo
    (In the 'planning' stage, to file ch. 13 if/when we have to.)

    Comment

      #3
      Right now, my finance doesn't allow me to go for a new car. So, I want to ask a question: Is having another car in my spouse's name be counted towards the IRS standard auto expense (1 car - $320 and 2 cars - $640 in Miami) for maintenance? My wife is not part of my Ch.13.

      I don't want to go for a new car loan/lease. Instead, I want to use my friend's car who is staying with us as paying guest and ask him for a help to transfer the title/insuranace to my spouse name for 3 to 4 months until Ch.13 hearing is over. My friend's car is very old and he is going to use it and not my wife but just the title in my wife's name. In that way, if he agrees to help me out, then I can show 2 cars in my household and my expense will be more in Worksheet and my NDI will become less?

      I know it's sort of complicated..But, I would like to know any issues/problems/feedback? Thanks.

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        #4
        I'm not sure that is a good idea and I am not sure that would pass the court.

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          #5
          Sort of sounds like fraud to me... Trying to pull something like that could get your case dismissed.

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            #6
            Originally posted by smkrishna View Post

            I don't want to go for a new car loan/lease. Instead, I want to use my friend's car who is staying with us as paying guest and ask him for a help to transfer the title/insuranace to my spouse name for 3 to 4 months until Ch.13 hearing is over. My friend's car is very old and he is going to use it and not my wife but just the title in my wife's name. In that way, if he agrees to help me out, then I can show 2 cars in my household and my expense will be more in Worksheet and my NDI will become less?

            I know it's sort of complicated..But, I would like to know any issues/problems/feedback? Thanks.
            What you just described is fraud, and I wouldn't go there. At all. Don't do it.

            Your "paying guest" is part of your household. Since you have to show his contribution to the household the trustee will already know there is someone else there (other than your wife) living with you.

            NOT work the risk of having your bk dismissed permanently or finding yourself in even more hot water.
            Filed Chapter 13 02/2006 - Confirmed 05/2006 - Discharged 09/2011
            I'm not an attorney. My replies are merely suggestions or observations, not legal advice. As always, consult with an attorney before making any decisions.

            Comment

              #7
              If you would not be willing to repeat that plan to the trustee if asked - then its probably not a good idea to try and pull it off just to count the extra expense.

              Your attorney's advice, I assume, was to make sure you have reliable transportation going into a 3-5 year chapter 13. Plotting fraud to lower your plan payment is not what he was suggesting. Of that, I'm pretty certain!
              Get mortgage modified: DONE! 7 months of back interest payments amortized, payment reduced over $200/mo
              (In the 'planning' stage, to file ch. 13 if/when we have to.)

              Comment

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