What if my car expenses exceed the allowable amount?

[seanp951]

I'm considering filing a 13.

I'm also considering replacing one of my cars. If I were to buy a car that was better and more expensive than what I have now, and as a result my monthly car payment exceeded the allowable amount....what happens?

Does the trustee just reject my BK?

Can they force me to liquidate the vehicle and get a cheaper one?

Do I somehow get the excess amount removed from other areas of my alloable budget?

I don't want to cheat, but if I can get a nicer car, that is newer and better, why not.

If I do buy a car and later file BK, is there any time period that if I wait, will help me avoid any allegations of abuse?

Right now my wide and I have two Japanese cars... Combined payments are about 1000... Which is around the max.

If I sold one, and bought a newer csr, but now instead of 1000 per month, my combined is 1200-1300 / month...what happens.

[momofthree]

From what I understand, they can force you to surrender the vehicle.

If you want to get a newer car, more power to you, but you'd be wise to keep it under the IRS limit of $496/mo.

[newbie2]

If you purchase a new car with a payment over the limits be prepared for push back from the trustee. Think of it this way: You already have a decent car with a payment that is within the allowances. Adding a new car payment that is more than the allowances smacks of "let's live it up while we're in the plan and screw the unsecured creditors". You have to remember that the trustee is there for the creditors, NOT for you.

[catleg]

Yes you get pushback from the trustee on your plan. Be prepared to live with the ownership allowance and make up any overage through other slack that may exist in your plan. No slack? That's a problem. Get a cheaper car. However, I'll also add, if you get stuck with a high APR, put the car in the trustee's plan payment (pay it through the trustee); they may be able to enforce a lower interest rate or spread it out over more months.

[woeisme]

that extra $ comes out of your pocket, not the creditors, because the trustee will only allow so much, so you have to trim other areas of your budget to make the car payments. trustee doesn't care if it comes out of food allowance, utilities, clothing, personal care items, whatever, but be assured they will not allow over the limit car payments to slide through at the expense of your plan payments, sorry. That's why the limits are there, so people don't play the system.

[seanp951]

That's what I thought so "push back" means they will require me to make up the excess from other areas of my budget? Ok, got it.

It's probably a bad idea to go into a 13 and have excessive car payments....

If I go into the plan and my car has 36 months left to pay, will they automatically spread the remaining payments out over the next 60 months of my plan? Or would I keep making regular payments for 3 years until it's paid off as scheduled?

What if I replaced both cars but got one more expensive and one cheaper...so that my overall. Monthly was the same....would that look ok to a trustee? I'm just thinking of how to get one good solid car for family, but not go over monthly limits.

Current family car is a 2007 suv, Japanese, with 65k miles. If we do a 5 year plan, it will be pushing 100k miles by the end of the plan, maybe more...which means we will have some car repairs to budget for...

What happens to that 496 per month after cars are paid off...do you get to bank some of that for repairs and upkeep or not? It wouldn't seem fair to have one person in 13 have two newer cars making 496 payments eachm while another person has an older car that need more upkeep, and them not get some of that money for budgeted repairs.... How do they calculate that.

I don't mind hanging onto my existing cars another five years, they are both very nice, my fear is that when the ars get paid off...which will happen during the 5 year plan...then the trustee would take away the 496 per car to pay off creditors.... And then while I'm still in my 13 plan, my dar has major mechanical problems...and I don't have money bedgeted for the repair. Keeping some or all of that 496 for repairs would allow for a repair budget safety fund.

How does that work? This is why I was thinking of buyi a newer xar..so it would be under warranty longer and I'd have less worry bout being stuck with big repair bills.
Thanks.

[catleg]

Yes they would spread the payments out over a longer schedule.
Not sure about the high/low scheme, I think it would probably work.
I think the car operating allowance is supposed to include repairs.
If the car payment goes away too early they will likely step up your plan payments.
Ideally you finance a recent model used car for 6 years about a year before filing, if you can plan that far ahead.
If not 4 or 5 years will work, if the APR is too high the trustee can lower it for you if he is making the payments in plan (and getting his commission, which comes from the unsecured creditors).

[kornellred]

Don't rely on trustee pushback. Investigate the matter with a bankruptcy attorney before filing. If you have a car loan that will be paid off within the Chapter 13 plan duration, it is exceedingly likely that you will be ordered to increase your plan payment the month after the car loan obligation is complete. There are probably exceptions to the general rule, and that is why an attorney is usually necessary when matters of law are not starkly obvious. The plan payment increase will be clearly stipulated in the Chapter 13 Plan Confirmation documents.

These days, even the least expensive vehicle models are expensive to finance. 72 month financing can be procured even on base models. That's the position I found myself in - my Chapter 13 5 year plan will be finished 4 months before my 6 year auto loan is paid off.

[catleg]

It is always good advice to consult your attorney.
However the advice may hinge on "how" you ask the question.
Because lawyers are forbidden from encouraging debtors to incur new debts when contemplating bankruptcy.
They can certainly tell you to pay or not pay existing debts, or how to best arrange your assets to fall under exemptions, but they're not supposed to talk about new debts with you.

[Slingerland]

Not trying to hijack the thread, but I have a similar situation. I have three car payments, all three are upside down and less than 910 days old. The payment for my wife's car is significantly above the IRS guidelines, the paymehnts on other two are well below. My attorney has not indicated this will be a problem; I suspect the trustee will add the car's payment into the plan, but not give me the operating allowance.

[seanp951]

I know about the lawyers not being able to advise to incur new debt...what crap....they should be able to advise me what is best for me, nit the f...ing creditors...who do they represent???

So ideally get a newer car and finance for 6 years about a year before you file. That way you pay it off only by the end of the plan.... One car will be paid off in three years. The other in 4 years.

If I file a BK, will they take my car with 3 years to pay, and stretch it out to 5 years so the payment amount goes down..freeing up money for othervcreditors?

That sux...so really it is better to buy a newer car before you file because if you aren't in enou debt..they make you pay more back..this whole system seems to benefit you more if you are further in debt....

I ought to buy a frickin Vette... . Ok, not really....

My credit score is 677. Is that going to get mean ok loan or a total $hit loan with crummy rate? I haven't tried to get a loan for a few years... M score was muchnhighher wheni got the car loan....

is there any benefit to lease before av13? I would think no, because at thevend ofvthe lease I'd be in the 13 and likely have to forfeit the car... What happens if you are in a lease that finishes mid chapter 13?

[jetsfan2010]

Interesting thread. To answer seanp, I would advise getting a new car via loan/lease before you have that 13 on your credit report. With your scores, you should be able to get a good loan with a good rate.

[momofthree]

I wouldn't lease a car. There have been quite a few posters on her over the years that were freaking out at the end of their lease because they were having difficulty getting another vehicle. Besides, if you're going to be paying for a car payment anyway, may as well leave your bk with a paid-in-full vehicle rather than exiting your bk and needing to take on new debt for another car right away.

[catleg]

I wouldn't lease a car. There have been quite a few posters on her over the years that were freaking out at the end of their lease because they were having difficulty getting another vehicle. Besides, if you're going to be paying for a car payment anyway, may as well leave your bk with a paid-in-full vehicle rather than exiting your bk and needing to take on new debt for another car right away.

Exactly. You are not penalized for building equity as you payoff secured debt. And you have the option to surrender the car at anytime thru a plan mod if it's a lemon.