Is this fraud???

[eltaur2000]

I just heard from another poster she bought a car a month before filling. It was included it in her Chapter 13.

This has one main advantage. You can get the additional $500 allowance to make car payments. Esentialy my $600 DMI will be a a car payment becuase I have to pay in full.

This would leave my other creditors with about $100.00 a month if they are lucky.

I don't want to be fraudulent but I don't think my car will last 5 years without a major repair. Were am I going to find the money.

[AZNoName]

If you're going into a 60 month payment plan and your car won't last, I don't believe it would be fraudulent to purchase another vehicle, as long as the payment is reasonable. I've heard of judges getting unhappy when debtors reaffirm vehicles that are underwater or purchased right before filing, but I don't think its fraudulent.

I purchased a used car in May, before I knew I would be filing. I paid 20K for it off the lot, but the trade in value is 14K so it's technically underwater. The Judge might not be happy about it, but oh well. I have no problem paying 20K over 5 years.

[salsa]

The only thing I was told is to wait 91 days after buying a car before filing.

[eltaur2000]

But since your technically taking the money out of your unsecured creditors hands to pay to a secured creditor for an asset that you are going to get to keep does not look bad?

[salsa]

No, it's called pre-bankruptcy planning... Of the 5 consults I have had.. That was the only thing they could all agree on.

[LadyInTheRed]

As the poster you heard it from, I can tell you it is not fraud. It is not fraudulent to incur debt that you intend to pay. When I was first contemplating bankruptcy, I read on this board that if you have an old car, it is a good idea to get a reliable one that can get you through your Chap 13. It sounded too good to be true, so I asked all 3 attorneys I consulted with. They all said it would be okay to finance a car before filing as long as I can afford the payment. I asked the attorney I hired "isn't that going to upset the unecured creditors?" He laughed and said they can get as upset as they want but there is nothing they can do about it.

My plan was easily confirmed and no questions were asked about the car purchase.

If you buy a car before filing, make sure that after the car payment, you still have enough disposible income to fund a feasible plan. Also, make sure the lender perfects its security interest in the care before you file.

[eltaur2000]

Lady,

Break it down in 3rd grade language. By feasible do you mean I can have a $500 a month car note and only pay my unsecured creditors $100 out of my DMI?

[AZNoName]

I think it has to appear like you're not calculating this to the point where your payment is practically nothing. it has to seem like a good faith effort payment.

[eltaur2000]

Let's say my car payment is $450
My secured debt is $116 (Best Buy & Room Place)

My DMI is $600

My creditors are forced to accept $34 month for 60 months to cover 47k in debt?

It just sounds to good to be true!!!!

[AZNoName]

Hmm, I'm not sure how youre calculating it. Did you subtract your car pmt and secured debt payments from your DMI and come up with 600/mo? or is your car pmt and secured debt pmt not included in your DMI?

here is how mine worked:
Net income (6000) - expenses, utilities, food, etc (5000) = 1000 DMI
I did not include my car pmts into the expenses because it would get paid by the plan as part of my plan payment and included in my DMI.

[LadyInTheRed]

Lady,

Break it down in 3rd grade language. By feasible do you mean I can have a $500 a month car note and only pay my unsecured creditors $100 out of my DMI?

Your Schedules I and J must show enough DMI to fund a feasible plan. For a plan to be feasible, your plan payment must be enough to cover any secured payment included in the plan, any attorney fees to be paid in the plan and the trustee's fees (assume 10% of the plan payment to be safe, but that's probably high). Whatever is left goes to unsecured creditors. If you have non-exempt assets, what goes to the unsecured creditors has to be at least equal to the value of your non exempt assets. If you don't have non-exempt assets, there is no mimumum amount that must go to creditors. My plan pays "pro tanto" to unsecured creditors, which means they get whatever little bit is left. That will probably be closer to 0% than it is to 1%. So, if your DMI before buying a car is $600, you buy a car with a $500 payment and have a 60 month plan, $6,000 ($100 x 60) has to be enough to pay attorney fees and trustee fees.

This is a bit of a simplification and you should consult with a few attorneys about your specific situation before you go out and buy a car.

[eltaur2000]

No I dont have a car payment now. But If I buy a car the Illinois allowance for ownership is $495.

Those $495 will be tacked on to my allowable expenses wich will reduce my DMI to $105.

From those $105 I have to pay Secured and Un secured debts correct?

[LadyInTheRed]

Hmm, I'm not sure how youre calculating it. Did you subtract your car pmt and secured debt payments from your DMI and come up with 600/mo? or is your car pmt and secured debt pmt not included in your DMI?

here is how mine worked:
Net income (6000) - expenses, utilities, food, etc (5000) = 1000 DMI
I did not include my car pmts into the expenses because it would get paid by the plan as part of my plan payment and included in my DMI.

That's how mine was done as well. It wasn't required that my car payment be included in the plan, but my attorney suggested we include it to give the trustee something to earn a fee on. Keeps the trustee happy without any additional money coming out of my pocket.

[ValleYum]

Does Eltaur have to have exemptions to cover the equity in the secured items from Best Buy and Room Place?

[eltaur2000]

Lady,

So basicaly I just have to have enough to pay all my secured debts (Car, Best Buy Appliances, and The Room Place furniture) my attorney and trustee fee?

If I can cover that using my DMI and there is little to nothing left my un secured debt's get nothing?

A plan like this can get approved?