Auto advice....

[baguy]

I'm planning on filing chapter 7 in IL in about 9 months or so. The main stumbling block in my potiantial filing is my car. I own it outright (no lien), with a value of about 10,000. Anybody have any suggestions on the best course of action? Is it far enough out (I haven't contacted any attorneys yet) that some of these options are still open to me?

1. Surrender to the Trustee. What happens in this situation? Do they give me my excemption back in cash in this case?

2. Sell the car now, purchase a junker that is within the exception, and live off the sale money for the next 9 months. Is this sale money considered income? Would this be considered an "abuse" situation?

3. Auto title loan? Not sure how that would work, or what potential benifit it would give me.

4. Buy back from Trustee? Anybody know how that works? Would there be a payment plan set up after discharge or something?

5. I recently ran over a deer, and am not sure what the damage is to the undercarriage / exhaust system. Can I get a repair estimate from a mechanic, and deduct that from the bluebook value for purposes of the car's worth for the Trustee?

6. An other ideas anybody have?

Thanks!

[baguy]

Or, another option....

Sell the car I currently have, and then use the money I get from the sale for a large downpayment on another car that is financed....then re-affirm this loan in the chapter 7. Would this be considered "abuse"?

BA

[CindyLou]

what state are you in? There may be exemptions that will cover your car. Do you own other property? House?

[baguy]

Im in Illinois, so I believe I have 1400 for car and 2000 wildcard. So that is only 3400, which is a long way from 10,000 the car is worth....
The car is really my only asset, as I am upside down in the home.

[lrprn]

Im in Illinois, so I believe I have 1400 for car and 2000 wildcard. So that is only 3400, which is a long way from 10,000 the car is worth.....

Wherever you are looking, those figures are out of date. The newest IL bk exemptions now allow $2400 for auto and a wildcard of $4000 - see http://www.totalbankruptcy.com/state...is_summary.htm

Where did you get the $10K value for your car?

[baguy]

Kelly Blue Book actually says 14,000 for private party value....so it's even more than I thought. Only about 3 years old, and only 25000 miles on it. I guess I should have kept the auto loan instead of paying it off with the procedes of my last home refi 2 years ago....

I guess I can just drive it across the country a few times over the next 9 months before filing to get the milage up to a point that drops the value enough.....

[CindyLou]

I would go with the trade in value...

[lrprn]

Kelly Blue Book actually says 14,000 for private party value....so it's even more than I thought. Only about 3 years old, and only 25000 miles on it.

Unfortunately in this case, paying off your car wasn't in your best interests since you now have to protect the entire value with your exemptions But two years ago is a long time - I'm sure you thought it was the right thing to do at the time. Don't be too hard on yourself about that.

Try www.edmunds.com. There in the used car selling area you can input the mileage, exact 'extras', and overall condition of your car to get an adjusted price that's individual to your car.

Keep in mind that your trustee doesn't want to auction off your car - he/she would rather have cash to distribute. Your lawyer can likely make a deal for you to pay the trustee the difference between what your exemptions can protect and the value of the car. Not ideal, but it is a way to keep your car.

Here's one more idea - if your credit score is still above 700, then you could sell this car for market value, take the proceeds and get another car that requires a loan that gets you under $6800 equity - just a thought. Not knowing all your circumstances, this may be a bad idea in your case - another thing to discuss with your lawyer.

[baguy]

Thanks guys. Can anyone explain in a little more detail how a potential "deal" where I pay the trustee the difference between the value of the car and the exempted value would work? Would there be a payment plan that would be worked out AFTER the discharge? And then would this be considered an ASSET case, and therefore take longer to discharge? Thanks.