Buying a car before filing C13 - question!!

[cspa522]

I spoke with my attorney today, and mentioned we were possibly going to buy a car before we filed, but I wanted to know how long we have to wait to file if we did that. I've seen different answers from "one car payment," to "6 months."

I'm in Missouri. Does anyone have any idea how long we have to wait? The attorney is going to check and get back with me.

[SMinGA]

My atty recommends 90 days between purchase & filing. This is because if I buy a car before filing, its going to be at an absurd rate and then will be paid in the plan at 5-6%. Atty told me if 3 months pass, they are not likely to complain and even if they did - they would not win the argument.

[cspa522]

SMinGA, but you're not in Missouri, correct? I can't find anything online about a national standard for this, so I'm assuming it's by state/district.

[SMinGA]

Correct - I am in GA.

I believe you are correct in that its a district by district thing. I doubt there is any law about it, because the worst case scenario in a ch. 13 is you pay the new loan according to the terms of your note. Not exactly a bad thing...

For my situation, I would be taking on a high rate loan (can't get approved for anything 'good') knowing it would go down to till rate in a few months. So I would not intend to pay the 25%+ apr for the life of the loan.

SMinGA, but you're not in Missouri, correct? I can't find anything online about a national standard for this, so I'm assuming it's by state/district.

[cspa522]

As soon as I posted that I realize not only is it in your name, but also listed under your stats. Duh.

Per my attorney, who I just spoke to, I can buy a car at the existing rate and wait 30 days to file, with no hope of getting the rate crammed down.

She has to call me back after she finds out how long we have to wait to file if we buy a new car and want the interest rate crammed down as part of the plan.

Thanks!

[LadyInTheRed]

cspa522, have you already paid this attorney? She doesn't sound very experienced. You might want to shop around a bit. IMO, an experienced Chap 13 attorney should know the answers to these questions off the top of her head. The good sign is that rather than giving an incorrect answer, she's actually getting the answer. Every attorney has to learn by actually "practicing" law. If she is smart and has a mentor she can go to when things get difficult, you could be in good hands.

It sounds like you are confusing a cram down with a til rate. A cram down is a reduction in the principal due on the loan, it has nothing to do with the interest rate and can only be done if the car is purchase well before filing (I can't remember how long, but I believe it's over a year, and possibly as much as 3). In BK, interest rates on secured loans are sometimes reduced or increased to a "Til" rate. I don't believe the date of purchase is relevant to that.

[minan]

I had to buy a car in June because lease was ending in Nov. I filed at the end of July and the car is in my plan and will be paid off in 5 years. Atty doesn't expect any issue with this because I had a legit reason for buying and it was not a luxury car - just a reliable car.

[cspa522]

Lady - the attorney was referred to me by a friend who used her for a bankruptcy as well. She only asked to check on the time-line for putting a new car into a Chapter 13 plan because it has recently changed and she didn't want to give me the wrong information.

We aren't buying a luxury car. Something under $15,000 and we're keeping it out of the plan.