Ch.13 Curious Questions

[JPOP1]

O.K. The wife and I went to our 1st free consultation with a lawyer about filling a Ch.13 BK(in N.C.). The Atty. was a very nice lady that seemed to be looking out for our best interest. I got a lot of usefull info but as the day has went by I keep coming up with more questions and I thought I would throw them out for discussion.
Q1) I have two cars that are basically 1.5 years old, so under the new laws I'm required to pay them back at 100%. Together the monthly payments equal $1190.00 a month. So can I expect that this $1190.00 will be apart of my payment plan along with whatever percent I can pay back to the unsecured creditors?
Note: I'm going to have to wait a couple months before I can file so I can drop off some high monthly incomes from back in March and April. I recvd. a 10K bonus in March then I was let go in April with a pretty hefty severance package. This all counts as income. I make half of what I made at my old job. Hince the reason for filling BK. More Questions to follow.....

[lrprn]

Hi JPOP1 - welcome!

Under the new bk law you pay back 100% of your car loans *IF* the car was purchased less than 910 days before you filed. Since your cars are a year and a half old, you fall on the 100% payback, no cramdown side for your car loans.

However, it is possible to stretch the remaining amounts owed out through the length of your Ch 13 plan. Our lawyer encouraged us to do just that with our cars, so the monthly payments are actually less than we were paying per month pre-bk because the loans are stretched out to five years and then divided by 60 to arrive at the monthly payment. Our trustee makes our adjusted car payments every month through our plan. If you are going to make payments yourself outside your plan, then I don't know what the best approach to take will be in that case.

[Jman30]

O.K. The wife and I went to our 1st free consultation with a lawyer about filling a Ch.13 BK(in N.C.). The Atty. was a very nice lady that seemed to be looking out for our best interest. I got a lot of usefull info but as the day has went by I keep coming up with more questions and I thought I would throw them out for discussion.
Q1) I have two cars that are basically 1.5 years old, so under the new laws I'm required to pay them back at 100%. Together the monthly payments equal $1190.00 a month. So can I expect that this $1190.00 will be apart of my payment plan along with whatever percent I can pay back to the unsecured creditors?
Note: I'm going to have to wait a couple months before I can file so I can drop off some high monthly incomes from back in March and April. I recvd. a 10K bonus in March then I was let go in April with a pretty hefty severance package. This all counts as income. I make half of what I made at my old job. Hince the reason for filling BK. More Questions to follow.....

Welcome to the forum! Feel free to ask any questions....you'll always get more answers than you thought possible. So many people here have been through exactly what you are going through now.

Like Lrprn said, your payments will probably be less than the $1190 since they will spread it over the life of the BK.

And maybe this is part of the old law, but don't they just have you pay back the value of the vehicle, not the interest?

[JPOP1]

Thanks 1rprn & Jman30! Jman, the new BK laws dont allow you to just pay back the value any longer. You have to pay 100% when the cars have been purchased within like the past 2.5 years. I financed both of the vehicles for 72 months so I still actually owe 5.5 years on them. Yikes!! Anyway my lawyer has told me that I should just stop paying on the Truck that I have and let it go back. Once the bank sells it and trys to charge me the balance that is still going to be due then we can charge that off as unsecured credit. This will save me 651.00 truck payment plus not to mention the gas money it was costing me to fill it up every week to drive to work. This brings me to my next question.
Q2) If I stop making my truck payments, one which is due now, then I will have to miss one more payment the first of October before filling the 1st of November. Does anyone think that they will reposses this vehicle in that 2 month time frame. Or should I go ahead and make this months payment? I might be able to squeeze by making this months payment.

[Minnymouth]

SAVE YOU MONEY.......... if your turning it back in, DON'T MAKE ANY MORE PAYMENTS....... they would have to lift the "stay" anyways to repo the vehicle while in BK...... so save your money for other things.....

Do you want to keep a new car.....???? Make that decision while you have the chance too...... Keep the other new vehicle, high payments, or RIGHT NOW downsize to one thats more affordable and within your budget till your bk is over and your financial affairs are back in order........

If you are completely "upside down" on your vehicles, I would consider a vehicle change and solve the problem is I could......

Your choice......

[JPOP1]

Minnymouth, I think that my situation may be a little unique. My wife and I make over the Median income combined. We cant file ch7, and we currently dont bring home enough Net income to make payments on our House, 2nd mortgage, the 1 car we plan to keep,everyday living expenses and then have ANY left over to pay the unsecured creditors. So when I say "save money" thats what I'm referring to. By letting the car go back then I save $651 + insurance + gas. So this gets me closer to have some extra income to pay the unsecured credit. I DO NOT want to sell my house. I plan on living their a long time. We are both in our mid to early 30's.
I would love to just go out and trade these vehicles in for ones with lower payments. But how can you do that when they both have at least 8K in negative equity. Then when my credit gets pulled they are going to see that I dont make no where near the amount of money I used to and with that my debt to income ratio is terrible. I dont think trading is an option. I havent even tried it so maybe I'm wrong.
I still have to drive to work for the next couple months before I file. If I stop making payments now how long will it be before I wake up one morning and its gone to the repo man?

[Minnymouth]

Maybe some of the others who are in Chapter 13 (or have been) will be able to help you with this issue......

I was a chapter 7, tried to do a 13, payments were not feasibable, so 7 it was!!!

I can understand the Chapter 13 high payments..... and the freeing up of $651. , that will help...... but I also believe that you can downsize the other vehicle if you "wanted" too...... with permission.....

No law says you have to keep and pay for a new vehicle, if a used one is what you need or want right now.....

Any suggestons comments for him folks.......???

[lrprn]

(edit) I still have to drive to work for the next couple months before I file. If I stop making payments now how long will it be before I wake up one morning and its gone to the repo man?

Hard to say about the repo man, JPOP1. Have you been served with a default notice yet? That's the first legal step towards repossession.

I've seen several folks here and on other bk boards say two consecutive missed months of payments is a potential trigger for a repossession. And the lender doesn't need to notify you they are coming or where they will repossess either (but they do need to have sent you a default notice....although sometimes they send it to the "wrong address" then play innocent afterwards....they have all kinds of tricks). If you know you are going to let the truck go back, then consider contacting the lender and make arrangements ahead of time to drop the truck off at a designated time and place.

A suggestion - since you are already at two missed payments, be sure to take any items you need or want out the truck right now. If they are in the truck and it's repossessed, it's difficult (if not impossible) to get those items back in a timely fashion. Better safe than sorry.

[JPOP1]

Thanks 1rprn. I'm only 3 days behind for this month. I'm not 2 payments behind as of yet. Thats what I was considering. I plan to file in Nov. because I need to erase some High income from my past 6 month report. Good info on the default letter. If that is the case then I might wait until I get that letter. Hopefully it want come between now and Nov.1st and I will be save. If it does come then maybe I can squeeze a payment in to satisfy them until 11/1. Thanks again.

[aa06a47]

The new bankruptcy law, in its infinite wisdom, allows in the expenses the actual amount for secured claims (such as cars, home). Right now, there seems to be no limit on the amount. So, prior to filing bk, if you give up secured debt, you are probably just providing more "disposible" income to pay the unsecured creditors in a chapter 13.

Each person has to look at this in there own situation. If your showing negative on the means test with it you may be allowed the chapter 7 route. For example, if my house payment would have been 300/month more than it is now, I would have been able to file chapter 7 instead of chapter 13. Just keep these things in mind when considering if you want to let secured debt go prior to filing bk.

[rrockinggramma]

I am wondering however if you include both cars, even though you can't cram them down, if the interest on those loans will stop accruing. In my case, I paid my vehicle at 100 percent, however it was all principal, no interest. Of course the trustee paid the company a 6 percent interest rate, but it was figured only on the principal of the car. So look at the principal owed on the cars and see if that doesn't save you some money too even if they are not crammed down to FMV.

[aa06a47]

Thanks 1rprn & Jman30! Jman, the new BK laws dont allow you to just pay back the value any longer. You have to pay 100% when the cars have been purchased within like the past 2.5 years. I financed both of the vehicles for 72 months so I still actually owe 5.5 years on them. Yikes!! Anyway my lawyer has told me that I should just stop paying on the Truck that I have and let it go back. Once the bank sells it and trys to charge me the balance that is still going to be due then we can charge that off as unsecured credit. This will save me 651.00 truck payment plus not to mention the gas money it was costing me to fill it up every week to drive to work. This brings me to my next question.
Q2) If I stop making my truck payments, one which is due now, then I will have to miss one more payment the first of October before filling the 1st of November. Does anyone think that they will reposses this vehicle in that 2 month time frame. Or should I go ahead and make this months payment? I might be able to squeeze by making this months payment.

If you have determined you don't need the truck, I wouldn't worry about when they will come and get it. Just start saving the money for the lawyer or getting thinks you'll need like cloths, food, new washer/dryer...ect. Chater 13 sucks, there isn't much left over once the bk starts.

[JPOP1]

Thanks aa06. Thats probably what I will do. I do still need the truck to get back and fourth to work. My attorney said that I should look for something else to drive that is cheap but reliable. Thats sounds easy but I dont see how I'm going to get a loan with my current debt to income ratio?

[JPOP1]

financing car before I file BK13

Well somehow I managed to get approval for a vehicle loan today despite the fact that my debt to income ratio is way out of balance. I'm looking at financing around 16K over the next 5 years. This will allow me to voluntary surrender my high truck payment of 631.00 a month with a balance of around 32K.
My question now is whats going to happen once I file for BK regarding my new creditor of this used car? More than likely I will make one payment on this car before I can file the first of November. Since you have to pay the secured debt at 100% for a car loan thats new do you have to include it in the BK or can yo ujust keep making the payments as normal. I'm doing what my attorney said to do but I'm just afraid that the new creditor will come after the car since Its such a new loan.

Note: I havent actually took possesion of a new/used car yet. I basically got a approval over the phone from a local dealership. I have an appointment set up for this Saturday. All I'm supposed to bring is my most recent pay stub, 6 references, telephone bill and Drivers License to secure the loan.

[Jman30]

Well somehow I managed to get approval for a vehicle loan today despite the fact that my debt to income ratio is way out of balance. I'm looking at financing around 16K over the next 5 years. This will allow me to voluntary surrender my high truck payment of 631.00 a month with a balance of around 32K.
My question now is whats going to happen once I file for BK regarding my new creditor of this used car? More than likely I will make one payment on this car before I can file the first of November. Since you have to pay the secured debt at 100% for a car loan thats new do you have to include it in the BK or can yo ujust keep making the payments as normal. I'm doing what my attorney said to do but I'm just afraid that the new creditor will come after the car since Its such a new loan.

Note: I havent actually took possesion of a new/used car yet. I basically got a approval over the phone from a local dealership. I have an appointment set up for this Saturday. All I'm supposed to bring is my most recent pay stub, 6 references, telephone bill and Drivers License to secure the loan.

I don't know if you can do this....isn't this a red flag to a Trustee?? Taking on $16,000 of debt a month before you file? Does the dealer know you intend on filing?????