Can I even get a car loan?

[Idjut]

We're in the planning stages of our BK 13 filing and attorney wants us to get a newer car due to the age of ours. It's paid for, but won't last another 5 years. Also wants us to raise our secured debt so less to give to unsecured debts. We have $100,000 cc debt. I'm half afraid to go into a car dealership and apply for a loan. We've never missed payments, so credit scores are around 700-705, but we have a high DTI ratio. Can we get a car loan?

[keepsmiling]

Congrats on finding a great attorney!
You won't know til you try. Others will be along with what worked for them. Good luck and...

welcome!!!!

[Idjut]

Thanks. This is all making my head spin. I'm about to miss paying my first CC payment EVER this Friday. The thought of going out and buying a car with the specific intent of combining it in a bankruptcy is just not in my nature.

[sophieanne]

Hi and welcome to this site. I was in a bad state when i filed (owed $100,000+ in cc debt) and was like you..never missed a payment until about a month before we filed (it was the attorney who told us to stop paying). We were able to get a car loan about 1 month before our attorney filed (I think it was a strategic plan by him, he told us to go out and buy it)...so I think you should just take a chance. I think you're attorney knows what he's doing...don't be afraid..just do it

[Idjut]

Thank you so much. This site has given me so much information and peace of mind.

[sophieanne]

You are welcome..and I agree with you..I've learned a lot from this site...Now get out there and do some car shopping....(Did you attorney tell you what type of payment you should be trying to keep within? If not, give him a quick call and ask).

[Idjut]

He mentioned $300 or so. We don't want the trustee to think we're making a "luxury" purchase. Ha. As if I'm used to luxuries. I drive an 11 year old van and have been paying $2500/month to credit card companies. Oreos are a luxury at this point.

[keepsmiling]

It is also critical to understand what your exemptions are and how much equity you should have in the car....iow, not too big a down payment. Are you going to sell the van?

[Idjut]

No, the van is only worth around $3000, and our daughter is turning 16 next year, so we plan to keep it for her to drive, or trade in on an old car at that time. We're looking to spend around $15,000-$16,000 on a used Toyota Camry, with no more than $1,000 down. We also have a paid for truck worth $11,000. I think some exemption should apply towards the truck also???

[keepsmiling]

Be sure to discuss this with your attorney.
Sometimes it's better to get another new vehicle. You may find yourself paying for the truck all over again.

[Idjut]

Good idea. Theoretically, we could use the $11,000 equity in the truck to buy TWO newer vehicles? I think I read somewhere the payments need to stay under $590 or something?

[keepsmiling]

It's something to discuss so you can understand your options. Looks like you can exempt about 7K. Anything over that may have to go to unsecured creditors. Not knowing where you stand bk-wise, it's hard to say, could be it makes no difference. OR it could theoretically even get you into a ch7 instead depending on your income. Read this to get a clearer pic... http://www.nolo.com/legal-encycloped...ankruptcy.html

[Idjut]

Thank you. We will definitely consider our options.

[grndmom53]

I agree with your attorney about the car issue! we are 4 years into our 5 year plan & have a car with 125, 000 miles! we pray everyday it holds up for another year. Of course it is a Toyota Camry & we have never had any issues. We also have a 12 year old truck that eats gas really bad! I wish we had traded in the truck 4 years ago.

I think the car advice is good...

[LadyInTheRed]

I bought a new car less than 60 days before filing and before I was more than 30 days late on any credit card payments. My debt to income limit was high and my credit score was 690. I got the "special event" rate offered by the dealer.

He mentioned $300 or so. We don't want the trustee to think we're making a "luxury" purchase. Ha. As if I'm used to luxuries. I drive an 11 year old van and have been paying $2500/month to credit card companies. Oreos are a luxury at this point.

Keep the payment to what your attorney advised and you should be fine. Luxury purchases are an issue if the monthly payment is too high or when you are worried about a debt being ruled not dischargeable. A $300 car payment is not going to be considered a luxury. Your going to pay off a loan in your plan, so discharge is not an issue.

The thought of going out and buying a car with the specific intent of combining it in a bankruptcy is just not in my nature.

I know it seems odd. But, you are going to pay it off. Make the purchase with a clear conscience.