Chapter 13 and car payments

[Barnabus]

Hi everyone!

We are looking at filing a Chapter 13. We have 2 cars that have about 7,000 left on them and will be paid off June of next year. The current payment is 500 total for both cars. In talking to an attorney, he told us that if we filed a 13 that the cars have to be added to the 13 and the balance will be spread out over the 60 months (so around 115 bucks a month). Is there any way of keeping the cars out of the 13? The other issue is that the car loans are through our credit union so if the cars go into the 13 I imagine the credit union will drop us. We'd rather not have to try to find a new bank if we can help it.

Thanks in advance!

[alorth]

Hi Barnabus.

We just got into our 13 in Feb. We had 2 cars that were both financed through different credit unions (though neither cu was our primary bank...the dealers hooked us up with them). One car payment was about $209/month, and one was about $275/month. They would have both been paid off BEFORE the 5 years was up....and one of them would have been done in less than 2 years. However, we were forced to include them in the Plan, so the interest rates were "squashed down" and the balances (@ 5700 on one and about 6900 on the other) were indeed spread out over the 60 months. We have already been dropped from one of the CUs, as they sent us a notice and closed our account (it only had $5 in it so we were technically members, but didn't bank there). Have not heard from the other CU, but they financed us at a very high interest rate to begin with as our credit was already getting bad when we bought the 2nd car a year and a half ago. Maybe they don't care as much? I don't know. But that's my recent experience.

[SMinGA2]

For car loans - it depends on the district. If your attorney says the car loans must be paid off in the plan - then there is probably no way around that. Your CU might not care - they'll get paid - but it would not hurt to open up a bank account elsewhere just to be safe.

[sandra123]

When filing bankruptcy under any Chapter, the bankruptcy code requires ALL debts to be included in the bankruptcy petition. All means all, so there is no way outside of paying the cars off prior to filing bankruptcy to not include them in the Chapter 13 plan. It's common for creditors to close your account when someone files for bankruptcy. It doesn't mean that they might offer you credit in the future, but it's pretty standard. Some people have tried to not report certain creditors, because they wanted to keep the account open, on the bankruptcy petition only to find out that the creditor close their account anyways. Creditors run reports on their customers and if the bankruptcy pops up the account will be closed. This is not good if the bankruptcy court finds out, they could dismiss the entire bankruptcy. Honesty is the best policy, throw it all out there and let your bankruptcy attorney do their job. Good luck!

[momofthree]

When filing bankruptcy under any Chapter, the bankruptcy code requires ALL debts to be included in the bankruptcy petition. All means all, so there is no way outside of paying the cars off prior to filing bankruptcy to not include them in the Chapter 13 plan. It's common for creditors to close your account when someone files for bankruptcy. It doesn't mean that they might offer you credit in the future, but it's pretty standard. Some people have tried to not report certain creditors, because they wanted to keep the account open, on the bankruptcy petition only to find out that the creditor close their account anyways. Creditors run reports on their customers and if the bankruptcy pops up the account will be closed. This is not good if the bankruptcy court finds out, they could dismiss the entire bankruptcy. Honesty is the best policy, throw it all out there and let your bankruptcy attorney do their job. Good luck!

This is inaccurate. While the cars must be included in the petition, in many districts they do not have to be included in the ch.13 plan payment. There are some districts that require that all secured debt be included in the plan payment, but overall, this seems to be a fairly small percentage.

[ValleYum]

...wrong thread...

[out4good3]

When I look at 13datacenter, at the rate that they are paying on my car loan it will be paid off in 6 months. I only had a year left on the payments when I filed and they only dropped the interest by 1%.

The only payment I elected to not be included in my plan payments was my house note. I was caught up on it at the time of my filing. It clearly states that the payment of that debt is not included in the plan, however, that didn't stop the bank from assigning my account to their BK department.

[AngelinaCat]

Hi Barnabus, welcome to the forum. As far as the credit union dropping you, talk with your CU's bk department and let them know that you are planning on filing. If you are able to keep making the payments, whether in or out of the 13 plan, assure them of that. You will probably be required to reaffirm the loan.

We are members of a CU that 'Hub has been a member of since about 1963, and he wished to stay with them. Though we had talked with the CU before filing, once we did file, we got the standard form letter informing us that we were being dropped. 'Hub called the CU's bk department again, and got everything sorted out. Our account were frozen for about 10 days, but once they thawed them, they even reversed the NSF fees that had accrued for the checks that were 'bounced' while the accounts were frozen.

[SMinGA2]

As far as I know - reaffirmations only happen in chapter 7.

Hi Barnabus, welcome to the forum. As far as the credit union dropping you, talk with your CU's bk department and let them know that you are planning on filing. If you are able to keep making the payments, whether in or out of the 13 plan, assure them of that. You will probably be required to reaffirm the loan.