Selling a vehicle in ch. 13

[momofthree]

We are planning to sell dh's truck to help cover my lost salary during the summer (I'm a preschool teacher with the summer off). His dad offered to buy the truck from us, but wants to pay us $500 a month until it's paid. Is that possible? I'm very wary of accepting this deal, but if I oppose it, dh will throw a hissy fit. Does the trustee require that we get the full sales price up front? Anyone know??? Of course, I will consult my attny, but it's the weekend, and I'm already in a mood over this. Hoping y'all can tame my fears....

[justbroke]

You can't sell it without permission of the Trustee and the Court. As for the terms of the sale, you can do an installment sale (so long as the truck isn't already encumbered by another loan). If you do an installment sale, you need to put a lien on the title and physically hold the title even though it would be titled in your father's name (just like the banks do).

Second, converting the exempt item into cash, may be an issue in your State and District. In most Districts, the conversion of an exempt asset to cash, makes the cash exempt. However, a Chapter 13 is special in that it's a pending bankruptcy. The affects of exemptions on an asset converted to cash, may be an issue. additionally, if you're receiving $500/month in payments, that may be seen as disposable monthly income (DMI). I would proceed with caution.

Backing up a bit... if you are having income issues with your plan already, so much so that you need to sell a truck... you are in trouble. Your Chapter 13 has disaster written all over it. I'm saying that as a person who has been through Chapter 13. I did sell some (exempt) things a couple of months in ($700 worth). However, you will never make it by liquidating all your assets over time.

[momofthree]

Thanks for the reply. I asked dh if he planned to list us as lienholder on the title and he said no, that he wasn't even going to tell the trustee that he was taking payments for it--that no one would know. I flipped out on him about not wanting our bk dismissed over something so stupid. Could we get dismissed if they find out that we're accepting payments on it, and how would they find out? '

Furthermore, how does getting permission work? Do we have to tell them the sales price, etc? Or do we just get permission to sell and then sell it and we're done? There are no liens against the truck and we haven't even driven it in at least 6 months (3rd vehicle) We do still have to pay to insure and register it though, so it's basically a money drain sitting in our driveway.

Yes, admittedly this 13 is definitely going to be a struggle, and we do qualify to convert to a chapter 7 if needed, but we're going to fight to make this work as long as we possibly can--hopefully to completion.

[Flamingo]

Momofthree - at any time during your Chapter 13 when you have any issue that is financial related, need credit, need to sell an item that is included in your Plan (i.e., car), contact your attorney to determine if it is possible. Your financial house during your Chapter 13 is not yours to control; the attorney will check with the trustee and get permission for you to obtain credit and/or sell your vehicle. It is not an overnight process and can take up to several weeks to get that permission but you will avoid doing something on your own that can get your Chapter 13 dismissed. Lie low and be prudent during your 13...tell your attorney everything financial-related that occurs and you will come out in the end in great shape, believe me.

[momofthree]

The attorney and trustee are already aware of our intent to sell. He told us to wait until we are ready to list it and then he'll obtain permission. We'll be calling on Monday to get the process started...