thinking about filing Chapter 13

[mlmom5]

Im about 40,000 in unsecured debt, i own a house, three cars which are paid off, i dont want to lose my cars, so should i file chapter 13, im below my states median salary. Any advise?

[kornellred]

Unless there are three drivers in your household who need the cars on a daily basis, I would try for a Chapter 7 filing and surrender the cars you do not need.

[keepsmiling]

Welcome to the forum!
More important than the cars would be the equity in your home.
We need more info to help you.

[forgotten]

What state are you in? How much equity in your home? What is the book value of the three cars?

[mlmom5]

I live in Illinois, I have no equity in the house, and the value on three cars is about $16000

[mlmom5]

I need all three cars!! Three Drivers

[TheBajan]

Some people here have been able to "buy out" the value of their non-exempt assets from the trustee and avoid a 13. You need to find out what your state exemptions are. For example, if you have a $3000 care exemption and an additional wildcard exemption of $2000, you are now looking at non-exempt assets of $11,000 instead of $16,000. If the trustee is willing to let you, you can buy them back for probably $9000 instead of the $11000. In my opinion, that would not be worth going through a ch 13 over.

[mlmom5]

yea but i dont have $9000 just laying around!!!

[LadyInTheRed]

Illinois bankruptcy exemptions are at: http://www.legalconsumer.com/bankrup...hp?ST=IL#other

Looks like a $4,000 automobile exemption plus a $4,000 wildcard exemption. But, there don't seem to be a lot of other personal property exemptions. You'll probably need at least part of the wildcard for furniture, appliances and other household items. One strategy to talk to a lawyer about is to exempt the cars and not the household stuff and gamble that the trustee doesn't want to bother with that stuff. You could also lower your equity by trading in one of your cars for a newer one and a new loan. But, don't take on a loan that you will have trouble paying after your discharge.

ETA: I wouldn't file a 13 just to keep cars. Who are the other drivers? I'm guessing there is at least one teen or adult child. Perhaps its time for him/her to figure out how to get a car of their own.

[mlmom5]

its my wife , and a 16 year old son

[keepsmiling]

Avoid a 13 if you can. Not worth it for a few cars.
How are you arriving at the value? Would you like to tell us about your cars?
Keep asking q's, talk to an attorney or two.
Get a feel for what local practice is like in your district. Perhaps you will have little to no problem, seeing as you have so few assets. Chances are LITR has a good idea about your personal property. Some places even let you stack your exemptions (like the unused equity) so you might be able to do that.

[mlmom5]

Kelley blue book

[keepsmiling]

Some folks have reported good results taking the cars to CarMax for a real quote.
Worth a shot, and a reasonable bargaining chip if the tt gets avaricious.

[LadyInTheRed]

How did your son get around before he could drive? I have a hard time believing he can't do without a car or work to save to buy his own beater.

Sometimes you can't give your children everything you'd like to.

You said in another post that the cars are worth $20k. Assuming you use all of your wildcard exemption on the cars, that leaves $12,000 that you must pay to unsecured creditors, plus the value of all of your other non-exempt assets (I'm guessing you'll have some because there aren't many personal property exemptions other than the wildcard). So, your plan payment in a 36 month plan would be at least $333, plus trustee fees and any attorney fees included in the plan and the value of your other non-exempt assets. You could extend it up to 60 months for a payment of at least $200 plus all of those amounts. Can you afford that?

Are you in Illinois? Not a community property state, correct? Keep in mind that only your intersts in assets are subject to the bankruptcy. Are all 3 cars yours?

[keepsmiling]

Keep an open mind about that 13...you are probably making a mistake on those cars, leaving yourself open to MAJOR headaches. Keep reading. There's more than one way to get thru a bk.