Confused about what will happen to my assets?

[PhxGuy520]

Ok I met with a lawyer yesterday to discuss chapter 13. I thought I understood everything when I left the office but now I am reading things online that have me a little confused.

As far as assets go I have...

1. a car that is paid off and worth about 6500 (really my girlfriends car, just in my name)
2. a truck that is paid off worth about the same (older truck I had hoped to give to my son is a couple years)
3. another car that is not paid off and I owe pretty much what it is worth. (my main work car, I plan to keep paying on this and its current on payments)

I live in Arizona so I think I have an auto exemption of 5k.

I also have four ATV's. Two are paid off, one is almost paid off and one is new with lots of payments left.

Ok now for my question...


My interpertation of what I read is...I can either list them all and take my chances that the trustee may take them and sell them. Or I can tell them I want to keep them in which I would have to pay the resale value of them through my monthly payment to the trustee? So in a way I would pay for them twice? (can someone clear this up for me???)

BTW...My main reason for claiming bk is my house has a second and I am way upside down on it.

[SMinGA]

If you want to keep non-exempt assets, there is a liquidation value that must be paid to unsecured creditors. If you were to file ch. 7, the non-exempt would be taken and sold so that $ would go to unsecured. In a ch. 13, unsecured must get at least as much as they would in a 7.

So yes, if you keep $20,000 in non-exempt assets then you would need to pay at least $20,000 to unsecured thru your plan.

[SMinGA]

PS-you may have trouble with the ATVs with payments remaining. A trustee could easily argue those are not necessary and that instead of paying them as secured debt you could give them up & pay more to creditors. Discuss with your atty.

[PhxGuy520]

If you want to keep non-exempt assets, there is a liquidation value that must be paid to unsecured creditors. If you were to file ch. 7, the non-exempt would be taken and sold so that $ would go to unsecured. In a ch. 13, unsecured must get at least as much as they would in a 7.

So yes, if you keep $20,000 in non-exempt assets then you would need to pay at least $20,000 to unsecured thru your plan.

thanks for the response. That makes sense.

One other question. Do you now how the car exemption works? So I get 5k (I think). Does that exemption only work if you keep only one car.

For example. I have a car that I owe on. There is no equity there, so there is nothing to exempt.

I have two other cars worth about 6500 each. Can I use that 5k exemption to try to save one of those or is the fact I have more than one car kill the exemption. Does that make sense?

[SMinGA]

In general - that depends on your district.

But since you are going to be filing ch. 13, I don't think it would be a problem if you said you wanted to give up vehicle A, use exemption on vehicle B and pay the non-exempt value of vehicle B thru the plan.

Have you started to assess your income/expense scenario, to get an idea of what you'll be paying into a chapter 13? Are you over the median income? (If so, you must do 60 months. If under median you may do 36.) Knowing those, even as a rough estimate, will allow you to figure out if you can afford to keep it all.

Figure it this way, I'm using #s as that makes it flow better:

Estimated Plan Payment: $400
Plan Length (36 or 60): 36*
Total Paid in: $400 x 36 = $14,400
Less Trustee Fee (assume 10% max if you don't know): $14,400 x .90 = $12,960
Less atty fee and/or priority debt: $12,960 - $3,000 = $9,960
Available for unsecured: $9,960


*If you are under median, you can do 36 if you can create a feasible plan in 36 months. If needed to pay more due to higher priority debt and/or non-exempt assets you could propose a 60 month plan.