Clarification to Walnut's question please!

[hopefulrelief]

O.K...
In regard to recinding a reaffirmation on a car loan. We have a car that we need to get out of the payments asap, our 341 was April 13th so we have a ways to go. Ours is an asset case, 8K in tax return, trustee is looking at our house-he will find no equity we are sure, made me take my wedding ring in and get a cash value-one came in at $110 over our exemption. We have rental property that is the cause of the BK and those are going to be foreclosing...no equity in these. Ick...hard to see on paper like that!

Anyway, my husband's job has halted practically. We are negative and if we could let go of the car it would help so much...to break even each month. Our attn said that once the trustee says he is not interested in the car we will be able to sell/trade it in on something less expensive. We owe about what we could sell for or trade for. We have to wait. We are hoping we can make it waiting. What happens if you can't make it? We are over median and qualified for 7 with means test...very close call. I am assuming that without the heafty car payment was may not have qualified. Are we stuck with the car for the 60 days or is there a chance to reorganize before?

Is it fraud to not reaffirm and let bank take car back after case is dismissed...thinking that you can't do that. I guess I am thinking that if you are getting rid of a payment that the means test could be reworked, we are doing worse than the 6 prior months to filing???....

Any thoughts?
Thanks!
hopefulrelief

[CindyLou]

If you reaffirm then you are again responsible for that debt. But (and I'm aksing the questions for others out there) don't you still get a transportation expense even if you don't have a car???

[DeadManCrawling]

If you reaffirm then you are again responsible for that debt. But (and I'm aksing the questions for others out there) don't you still get a transportation expense even if you don't have a car???

I believe you get an allowed transportation expense, that is supposed to cover mass transit, trains, buses, etc, but it is a number quite a bit lower than the numbers for car ownership.

Also, I have read in a few legal blogs that it if you own your car outright, with 100% equity, that you may not get any of the ownership or maintenance allowances. If correct, we own both cars outright, though ours is a chapter 13 case, which would be applied different. Still, it seems strange that we wouldn't be able to count gas and oil changes. I mean, we still have to pay for these, regardless.

[SinkingFast]

When your paperwork was filed, your attny didn't enter your actual monthly payment for the car. The attny entered an amortized amount because they have to project forward over the course of 60 months.

There has already been a Decision about surrendered Secured property and the Means Test:

http://www.bankruptcyforum.com/showthread.php?t=8093

[hopefulrelief]

Thank you guys...sinkingfast you are a wealth of information! I am floored by people on this board and their generosity! I am going to talk to our attny. I think we may be able to hold on for a few months with the payment but don't want to...that $ is food $ at this point!! We have not signed reaff papers yet. It would be a load off to turn it in and not worry about trying to sell it once we are discharged...I am afraid it may take longer (discharge and selling) than we could afford it...UGH! Its amazing how incompetent I feel making decisions now. I can't even go to the produce stand with our indecisiveness!!

Thanks you guys,
I really appreciate it!
hopeful

[Walnut]

Why make payments on a car you are going to surrender? The bank has to file a relief from stay in order to repo, and most won't bother until after discharge, then they will come a-calling.

[DivorceRuinedMe]

When your paperwork was filed, your attny didn't enter your actual monthly payment for the car. The attny entered an amortized amount because they have to project forward over the course of 60 months.

There has already been a Decision about surrendered Secured property and the Means Test:

http://www.bankruptcyforum.com/showthread.php?t=8093

"The court held that the installment payments to secured creditors may be included in the means test calculations. Section 707(b)(2)(A)(iii) provides that a debtor may deduct amounts that are “scheduled as contractually due to secured creditors in each month of the 60 months following the date of the petition.” The purpose of the means test is to provide a snapshot of the debtors’ financial condition as of the filing date, and as of that date, based upon the plain meaning of the statute, the payments at issue were “contractually due to secured creditors.” Therefore, it was appropriate to include them in the means test calculations, even if they stated an intent to surrender the secured property. Had Congress wanted to add a requirement that the secured debts be reaffirmed in order to be included in the calculations, they would have done so."

So, let me get this straight. You can include a car payment in the means test to lower your disposable income even if you plan to surrender the car? I wonder if furniture bought on a furniture store credit card be considered as secured property or unsecured? This is new furniture that was just purchased a year ago that I have not made any payments on yet (it was a deferred interest type deal).

[Walnut]

Yes, my attorney also used secured interest accounts in the means test as priority debts - including a widescreen TV, refrigerator, and furniture. I have no intention of reaffirming, but may redeem or just wait the guys out. Trustee had no issues with it nor did US Trustee seek to get involved.

[SinkingFast]

Remember, the payments are amortized forward over the next 60 months.

If you're at the beginning of a 5 year car note, you'll get most of your current monthly payment amortized forward. If you're in the middle or near the end of a 5 year note, the monthly $$$ amount will be relatively small compared to what you're actually paying.

[Walnut]

That's right SF - but you still get the IRS limit which is generous, and if you end up higher in terms of payment, you get that - so not a bad scenario.

[hopefulrelief]

O.K...
Trying to hang here! Are there differences among states with this ruling? I noticed that this was GA, we are in Missouri. I swear at our initial meeting with our attny he said that in Mo you have to reaff car loans if you want to keep...can't ride out any longer. I really don't care one bit if they took the car tomorrow...have at it!! I just don't want to mess up the means test and be pushed into a 13...humm!

I will see if I can find something on MO, SF if you could point me in the right dirrection I would love you for it!!
Hopeful

[DivorceRuinedMe]

Yes, my attorney also used secured interest accounts in the means test as priority debts - including a widescreen TV, refrigerator, and furniture. I have no intention of reaffirming, but may redeem or just wait the guys out. Trustee had no issues with it nor did US Trustee seek to get involved.

Were you paying these secured interest cards for the TV, fridge and furniture when you filed or were you in default? I will be in default on one of them when I file as the deferred payments/interest will come due in June but the other one won't hit till January and I plan to file in November at the latest. I'm just wondering if this makes a difference in if they will allow you to use them in the calculation?

When you say redeem what does that mean? I know reaffirm means you agree to pay the debt as promised correct? Wait it out means they can come get the stuff if you do nothing right? (and chances are they won't).

[SinkingFast]

O.K...
Trying to hang here! Are there differences among states with this ruling? I noticed that this was GA, we are in Missouri. I swear at our initial meeting with our attny he said that in Mo you have to reaff car loans if you want to keep...can't ride out any longer. I really don't care one bit if they took the car tomorrow...have at it!! I just don't want to mess up the means test and be pushed into a 13...humm!

I will see if I can find something on MO, SF if you could point me in the right dirrection I would love you for it!!
Hopeful

Missouri is in the 8th Circuit Court. I poked around some at their website. Different Judges Opinions. I didn't find anything even semi related to a Decision on this subject. Doesn't mean it's not there. Just I didn't find it.

Here's a link to the main page for the different BK Districts in MO.

http://www.ca8.uscourts.gov/missouri.htm

And here's a link to the 8th Circuit:

http://www.ca8.uscourts.gov/index.html

You might have to go Judge by Judge looking at Decisions to see if a Judge has entered a Decision similar to the issue in your case.

[Walnut]

Were you paying these secured interest cards for the TV, fridge and furniture when you filed or were you in default? I will be in default on one of them when I file as the deferred payments/interest will come due in June but the other one won't hit till January and I plan to file in November at the latest. I'm just wondering if this makes a difference in if they will allow you to use them in the calculation?

When you say redeem what does that mean? I know reaffirm means you agree to pay the debt as promised correct? Wait it out means they can come get the stuff if you do nothing right? (and chances are they won't).

I was way in default on all three so.... you can redeem them if you want by making the company an offer after you are discharged (if they contact you). Or do nothing, ignore them and wait and see if they file a replevin to repo the goods. Chances are slim that they will. In fact, I know of no one on here who actually had to surrender their stuff in a replevin.