Filing pro se soon, rent my car from my grandmother...

[Tacadac06]

I plan on filing in about two weeks for Chapter 7, pro se. My case is fairly straight-forward, as I have few assets and rent a room in my Mom's house (I'll have a formal renter's agreement ironed out in time for the filing along with canceled rent checks). I have not made use of credit in nearly a year.

One complicating factor, relates to my car. The story goes, just over a year ago my sold off my last car to a junkyard and got a used car with my grandmother's help. However, with my credit being what it is, they didn't want me on the loan, at all, so my grandmother took full responsibility for the loan. The car and tag are both in her name.

I've been making minimum payments on the car directly to the bank (I don't have direct access to that account of course, but they're happy to take my payment regardless), and have been maintaining the car and keeping insurance on it. We have an understanding that the car will be transferred to me once it's paid off, but we don't have anything to that effect in writing, and she's technically/legally not obligated to do so.

For the purposes of my case, I will note the arrangement on my schedules as thus: I pay a monthly fee to my grandmother's crediting bank and maintain her car enough to keep it running, in exchange for use of her car, as I am unable to secure a vehicle of my own, and she accepts any loss of value due to mileage and general wear and tear.

I'll get her to sign off on a statement attesting to this as well. Obviously, I don't want the trustee going after my grandmother for a year's worth of car payments. I just wanted to get your opinions on the matter. Thank you.

[LadyInTheRed]

There is somewhere on the petition (maybe the statement of financial affairs) that asks if you are holding property for anybody else. Don't forget to list the car there in addition to any where else it is appropriate.

Your description of the arrangement is confusing. How about: "In exchange for the use of my grandmother's car, I make her car payments and am responsible for maintenance necessary to keep it running." I am not saying that is better from a legal standpoint, only that it is clearer way to describe what I understand the situation to be.

A possible problem is that your description (and my alternative) are describing only a part of the agreement with your grandmother. It may be that you should disclose your grandmother's agreement to turn the car over to you after it is paid off. You have a verbal agreement with her that very well may be legally enforceable under state law. Did you do any research before deciding she is not technically/legally obligated to comply with the verbal agreement? If the verbal agreement is enforceable, you may have an equitable interest in the car that is an asset you should list, regardless of how title is held.

Have you thought of how you will handle the car payment, insurance and maintenance expenses on the means test when you don't have title to the car?

I recommend you consult a bankruptcy attorney. Most give free consultations and you are not obligated to hire them. I don't suggest telling them you plan to file pro se. Consultations can be a very good way for a pro se filer to get information on this kind of specific question as well as learn of other issues that could arise in what they think is a straight-forward case.

[Tacadac06]

Perhaps I will speak to a lawyer. Even if I do have to list it, we owe more than it's worth so there's no equity there. I'm mostly concerned with the fate of the money I already spent on the car and the possibility of it being repo'd if they try to get the money back from the bank, no to mention what that'd do to my grandmother's credit. But that seems like a rather extreme outcome dependent on a very specific interpretation of my situation.

Screw it, I'll just list the car as though it's mine, note that I'm not on the title but make payments for it with the permission of the title holder, with the understanding that I'll take full ownership of it when it's paid off. That's the reality of the situation as me and grandma see it. There's no equity in the car, so they can't take it, and they can't discharge my grandmother's obligation to the bank, since the bank specifically excluded me from the loan. At worse, my obligation to my grandma will be discharged, which as a practical manner is meaningless. Any thoughts on this would be appreciated.

[Tacadac06]

Ok, a google search yielded a pretty good response from a lawyer for someone in almost the exact same situation:

This is a common scenario. Usually it occurs where your credit was sour and your brother was helping you. Assuming you use the car, there are a couple ways you can disclose it in a bankruptcy. The key is that one way or the other you truthfully disclose it. If you make the payments directly to the lender, I usually show the car on schedule B-personal property with a note in parentheses like this: 2008 Toyota Camry (loan against for $______ in brother's name, debtor makes all payments to lender) I then include the value of the car. The payment needs to show as an expense on schedule J-expenses. You do not list the lender as a creditor because you are not on the loan. This fits the situation if you make payments directly to the lender.

Other responses suggest that the most important thing is that I disclose the arrangement and do so accurately.