Two New Cars before BK

[peteisbroke]

My wife is looking at filing Chapter 13 and we are in the process of looking for a lawyer.

We had planed to buy a new car this fall and another one next spring. (This is before I found out about her massive debt.) The first attorney we spoke with suggested we could still buy two new cars before she files which will likely be within 60 days. Although we would not go over board, something like $350 per month per car, it just seems like the trustee would flag this as some sort of abuse.

A little more background. One is a 2003 with 180,000 miles. (it is shot) the other is a 2006 with 85,000 miles. We use both of them to commute to work each day in separate suburbs with my wife driving 20,000 miles a year and me driving 17,000 miles a year

Would this set of a flag?

What are your thoughts?

[newbie2]

It is not abusive. A chapter 13 plan is a long road, and you are best to enter it with good working vehicles that will last the life of the plan. Keeping the payments that low won't show abuse, so don't even worry about it. Good luck to you.

[IHateChase]

Keep reading and you will see that this is discussed regularly. It is so common that no one will even blink-- and it's smart planning.
Where the problems really arise in a 13 is when the old car dies and you have to beg the trustee to allow you to take on new debt.

[justbroke]

This is actually (somewhat) expected for a Chapter 13. Since the Chapter 13 will typically run for 5 years (60 months), having a reliable form of transportation is essential. So long as these cars are not luxury and are under the approximately $489/month each (ownership allowance)... you'll be fine.

Just don't buy them 2 days before filing! Make sure the title work is completed to avoid any issues.

[jrs]

What about getting a new car after you file?

[momofthree]

What about getting a new car after you file?

While this isn't unheard of, it's difficult and a huge pain in the booty. First off, you have to get trustee permission and secondly, you have to find a lender who will deal with you while you're in an active bankruptcy. You can avoid all the hassle by simply financing one before filing.

[BnkrptcyLwyr]

Buy the cars before filing. Much harder to get financing once you're already in the 13.

By the way, saw one judge here in Michigan actually allow 2 new cars with payments each at $650/month. Trustee wanted the cars to be surrendered. Judge said it was ok. Kind of astounded at that one actually, but it went in the mental folder for future reference with that judge. Typically, from what I've seen around here, a car payment south of $500 will be ok. $400/month is no problem at all. What you're proposing should definitely be ok.

[MOMof3]

Don't make the payments so high that you can't afford your 13 plan though...we had to surrender one car because with it, there was no way our plan would work.