Question about vehicle?

[mstgkillr]

My dad has a hotrod that he keeps at my house because I have the extra garage space. The insurance and car are in his name only but I do drive it every once in a while when it's not taken apart. My dad has always planned on giving me the car when it's payed off which should be in a few months. If I file Chapter 13 I was thinking he could just keep the car. The problem is, I have made most of the payments on the car while he payed for most of the go fast parts. When the trustee sees that I have made almost all of the car payments are they going to go after the car or my father for the money? I am current on all of my bills and never missed a payment on anything but that is probably going to change in a few months. What do I do?

[mstgkillr]

If he sold the car how would that affect things?

[SMinGA]

The car is your father's, your name not on it correct? Did you make the payments to your father or directly to the lender? If to your father it could be an issue.

Worst case scenario: the sum you have paid on it over the past 1-2 years could create a minimum amount you must repay to unsecured creditors during your plan.

[mstgkillr]

The car is your father's, your name not on it correct? Did you make the payments to your father or directly to the lender? If to your father it could be an issue.

Worst case scenario: the sum you have paid on it over the past 1-2 years could create a minimum amount you must repay to unsecured creditors during your plan.

My name is not on it and I paid directly from my bank to the lender most of the time.

I was hoping since I was paying the car while current on my other bills it wouldn't be an issue.

[despritfreya]

The correct answer is that you have an equitable interest in the vehicle to the extent you paid for it, regardless of how the title reads. If nothing else, the fact that your father plans on transferring title to you once it is paid for is proof of this. It needs to be listed in Schedule B and, if it is not exempt, needs to be accounted for to your creditors through the Plan.

Oh, in addition, Schedule B should reference the existence of the lien and the amount owed. The lender is not your creditor therefore would not go on Schedule D. If you are going to continue to service the loan, said payment needs to be referenced in Schedule J. However, if you are going to make the payments the Trustee may take issue with it as a "hot rod" is not necessary for your effective reorgainization and takes $$ away from your creditors. The better approach would be for dad to start making the payments.

[mstgkillr]

The correct answer is that you have an equitable interest in the vehicle to the extent you paid for it, regardless of how the title reads. If nothing else, the fact that your father plans on transferring title to you once it is paid for is proof of this. It needs to be listed in Schedule B and, if it is not exempt, needs to be accounted for to your creditors through the Plan.

Oh, in addition, Schedule B should reference the existence of the lien and the amount owed. The lender is not your creditor therefore would not go on Schedule D. If you are going to continue to service the loan, said payment needs to be referenced in Schedule J. However, if you are going to make the payments the Trustee may take issue with it as a "hot rod" is not necessary for your effective reorgainization and takes $$ away from your creditors. The better approach would be for dad to start making the payments.

The car will be paid off soon and after talking with my Dad he will probably just keep the car. He has a lot of his money invested in it too and doesn't want to see the bank take the car. I will no longer be making payments to his lender.

If I file in 6-8 months how would this car look now?

[despritfreya]

There is still an issue as it relates to the $$$ you paid. If you are asserting no ownership in the vehicle then you have gifted $$$ to your dad instead of using that money to pay your creditors. The gift/transfer must be disclosed and the Chapter 7 Trustee will have the right to recover the funds from your dad as the $$$, while paid to a lender, benefitted him. How much have you paid over the past two years (transfers within 2 years must be disclosed and gifts within 1 year must be disclosed)? A Trustee, if he/she wants to recover the $$$, will most likely ask if you want to step up to the plate before he/she will contact the family member.

Hopefully you have retained an attorney. Discuss this matter with him/her.

Best of luck

[lrprn]

Whoa, folks....let's back up here.

First, mstgkllr, if you aren't listed as a co-signer on this car loan, then the car debt isn't yours. The debt belongs to whoever's name is on the loan, regardless of who has been making the payments. If your name isn't on the loan, then you don't have to include the loan *or* the payments you've been making when you file.

Your dad may have to take on the remaining car payments or you may have to find a way to squeak the car payments out of whatever dollars you can save each month because I doubt you can list car payments for a car loan that's not yours as a legitimate expense when you file.

DO NOT allow your dad to put your name on the title when the car is paid off! Just have him keep the car in his name until your bk is successfully completed, then take ownership.

I suggest that you talk this situation over thoroughly with your lawyer to find out what to expect around this car before and after you file. You need to proceed *very* carefully or you could innocently find yourself in a situation where you could have to pay for the value of the car or even lose it to the trustee when that's completely avoidable. Get sound legal advice *before* changing the payment set-up you have in place now.

And as far as the car payments you've been making being seen as insider preferential payments before filing, that's impossible since the car loan isn't yours. You have no debt obligation to the car loan creditor you are paying - that's a required element of preferential payments.

[despritfreya]

In response to:

"And as far as the car payments you've been making being seen as insider preferential payments before filing, that's impossible since the car loan isn't yours. You have no debt obligation to the car loan creditor you are paying - that's a required element of preferential payments."

You do not understand. No one is talking about a "preference". We are talking about a an avoidable gift and/or fraudulent conveyance. A debtor cannot simply pay someone else's debt, especially dad, and expect a Trustee in bk not to demand turnover of value of the conveyance. So either the OP has an equitable interest in the vehicle he has been paying or he has given away cash to or for the benefit of dad. Either way he has a problem.

It also appears that you do not understand the concept of "equitable" interest vs. "bare legal title". One has an equitable intererst in property to the extent that he or she paid for that property regardless of whose name is on title. An equitable interest is an asset of the bk estate. Bare legal title means that someone is on title to property but has not contributed a dime and is not claiming an ownership interest such as being on mom's bank account for "estate planning purposes". Bare legal title means you are not the true owner in any way, shape or form. Here the OP admits that he has an ownership interest with his dad and that dad's intent was to transfer title once the lien was paid off. If dad's intent materializes then OP's equitable and legal interest would be merged.

[Pandora]

In response to:

"And as far as the car payments you've been making being seen as insider preferential payments before filing, that's impossible since the car loan isn't yours. You have no debt obligation to the car loan creditor you are paying - that's a required element of preferential payments."

You do not understand. No one is talking about a "preference". We are talking about a an avoidable gift and/or fraudulent conveyance. A debtor cannot simply pay someone else's debt, especially dad, and expect a Trustee in bk not to demand turnover of value of the conveyance. So either the OP has an equitable interest in the vehicle he has been paying or he has given away cash to or for the benefit of dad. Either way he has a problem.

It also appears that you do not understand the concept of "equitable" interest vs. "bare legal title". One has an equitable intererst in property to the extent that he or she paid for that property regardless of whose name is on title. An equitable interest is an asset of the bk estate. Bare legal title means that someone is on title to property but has not contributed a dime and is not claiming an ownership interest such as being on mom's bank account for "estate planning purposes". Bare legal title means you are not the true owner in any way, shape or form. Here the OP admits that he has an ownership interest with his dad and that dad's intent was to transfer title once the lien was paid off. If dad's intent materializes then OP's equitable and legal interest would be merged.

I disagree - what you're saying basically amounts to paying the grocery bill every month or utilities.

The OP name is no where on the title of this vehicle - he is not obligated to list it, period - regardless if his father "intends" to give it to him years from now or not. What matters is what is owned the day of filing - not years down the road - and its clear that the OP does not own nor is obligated to this vehicle. The father will have to continue to make the payments on his own.

I agree with lrprn.

[despritfreya]

To Pandora,

You need to review 11 USC 541(a)(1). We are not talking about "consumables" such as groceries. We are talking about personal property that has value. And yes, it does not matter if the debtor's name is on the title. If a debtor has an ownership interest in something, he/she has an ownership interest.

By way of an example, say you want to purchase a house but cannot qualify for a loan. You ask dear old dad to buy the house for you. You put down, say, $10,000.00 (paid directly to the title company) and he finances the rest. Since you cannot qualify, the loan AND the deed is in his name. Dad forgets to quit claim the property to you. You file Chapter 7 six months later. During that 6 months you have been making the payment to the mortgage company. Yes, you could argue that all you were doing was paying rent but, are you going to claim it is not your house? If so, you have just given your dad $10,000.00 (the down payment) at the expense of your creditors and you will be unable to claim a homestead.

Moral of the story, think and discuss with a qualified attorney before you act.

I have dealt with the issue raised by the OP many, many times. If he files a Chapter 7 and the Trustee is smart enough to pick up on it there WILL be a problem.

[Pandora]

I understand what you're saying and inferring, however... in your own example of using the housing purchase - doesnt matter if "dad" quit claimed or not - the house is in dad's name - the loan is in dad's name - the deed is in dad's name - it has no bearing on your finances whatsoever - no moreso than if you were paying your landlord rent. YOU are not legally nor personally responsible for that loan or note, period. Quit claiming does not remove the liability to the note - it only removes your interest in it should you sell the property - the note is still legally "dads"
unless its refinanced under your name.

Show us examples of case law where this has occurred in BK, as its obvious from your postings you are apparently either an attorney or a paralegal - either that or you stayed at a Holiday Inn last night .

[despritfreya]

Pandora,

You still don't get it. Either the OP has a fraudulent conveyance to or for the benefit of dad or he has an ownership interest in the vehicle.

Quoting the OP:

"My dad has a hotrod that he keeps at my house because I have the extra garage space. The insurance and car are in his name only but I do drive it every once in a while when it's not taken apart."

Clearly dad's auto that he uses once in a while not like renting an auto from "Enterprise" so that argument goes down the tubes.

"My dad has always planned on giving me the car when it's payed off which should be in a few months."

Clearly, OP is acknowledging the he is an owner (either partial or full, doesn't matter) when you couple the above statement with,

"The problem is, I have made most of the payments on the car while he payed for most of the go fast parts"

Even if he is not an equitable owner he has transfered $$ to his dad. That money is recoverable if and when the Trustee picks up on it.

Since I have beaten this matter to death, if you do not grasp the concepts you can research the issue. Your keycite words are "fraudulent conveyance" "avoidance powers of a Trustee" and "equitable ownership".

[Pandora]

I do grasp it... thank you very much - but I think its hogwash.

Just like your example of the house situation - that'd be like me renting from someone, they hold the mortgage, yet I'm to report that I'm responsible for it all.

nope.

Same thing. Again show case law where it's been proven that a trustee has taken issue with this and then we'll talk, otherwise, I think you're either playing attorney or you're not a very good one that would suck your clients dry

[despritfreya]

Pandora,

I suppose we can agree to disagree but maybe you should look at

1. Fraudulent Conveyance:

In re Phillips 379 B.R. 765 (Bankr. N.D.Ill. 2007) which is just one of many, many cases discussing the issue.

2. Equitable ownership: quote from an "unpublished decision":

"IN RE: AMANDA LE; aka AMANDA LE TRAN; fdba DIAMOND CHINESE RESTAURANT; dba OCEAN ONE II M/V FKA THANH SANG II M/V; fdba PRINCESS ALENA M/V; fdba ASHLEY LE TRAN II M/V, VINH Q TRAN; dba OCEAN ONE M/V FKA NIKKIE N II M/V; dba COUNTRY CLUB NAILS, Chapter 12, Debtor(s).

Case No: 07-34244.

United States Bankruptcy Court, S.D. Texas, Houston Division.

November 21, 2007.

MEMORANDUM OPINION

MARVIN ISGUR, Bankruptcy Judge.

Debtors claim an equitable interest in two shrimping vessels. Debtors are not the vessels' legal owners. However, Debtors have made all payments on the vessels and receive all income from the vessels. The Court holds that Debtors have an equitable interest in the vessels and that the equitable interest is property of the estate."

__________________________________________________ ________

Interestingly you will be hard pressed to find cases dealing with minor dollars that constitute the bulk of the issues. Why you might ask? Because most consumers cannot afford to fight the fight and either settle or do not defend and allow the Trustee to obtain a judgment.

In response to the following name calling:

"I think you're either playing attorney or you're not a very good one that would suck your clients dry."

Please grow up. Until you have been an attorney dealing with these very issues for over 2 decades, try to keep an open mind. Once you have some experience under your belt you will see that the job of a Chapter 7 Trustee is to find assets. Remember, the Trustee is not the friend of the debtor. He/she has a fiduciary duty to the creditors and, also makes a few bucks on the way to meeting that duty.

Enough said.