What to do with the Trailblazer?

[mycreditisbad]

We are thinking of filing for BK. I need some advice about what to do with our cars. We have one paid off and currently pay $580 a month for a Trailblazer. We would like to unload it, but with gas prices who would ever buy it? Should we apply for a loan now for a new car (we are not behind on any payments and have already been pre-qualified) then turn the truck back in? How long should we wait before filing BK if we accept the loan for the new car? We are thinking of spending a max of $10,000 so we could afford the payments.

I know lots of questions, but we need to plan this out. Thanks!

[PaKettle]

Take this with a grain of salt, as I am not an expert but I think you could safely trade your Trailblazer in on a cheaper car with no problem. However, how will the extra money you have left over (say you pay only $280/month on the new purchase vs. $580/mo. on the Trailblazer) affect your means test with income left at the end of the month?

If you can still pass the means test, then you should be fine with trading in the TB on a newer cheaper better mileage car, I can't imagine that the Trustee would not see that as a good move for someone near bankruptcy.

I don't think you would have to wait very long at all before filing but you might have to "reaffirm" on the car in order to keep it since you will not have any equity in it at the time of filing, thus the car co. will want to repossess it. But that shouldn't be a problem. Let's see if the experts here agree with my assessment...

[JRScott]

It is not unusual to let an expensive car go in a bankruptcy and get a more affordable one. You might as Pa suggests take it to the dealer and see if you can trade down, not sure that would work but it might.

[yoyoma51]

It really depends what you owe on it.

Many people with SUV's owe WAY more than they are worth right now.

If you're in that boat, you may not be able to trade down (or you will end up in the same shape on the new vehicle). In this case, let it go in bankruptcy.

mycreditisbad, look at what comparable vehicles are selling for right now to see if you owe more than it is worth.

Hopefully others will chime in...Let's help the newbie out!

[AngelinaCatHub]

Yoyoma51, is that a Jetta on your Avatar? To our newbie, go to kbb.com and find out what your SUV is worth. If you buy a new car now still holding the old one, I'm not sure if that wouldn't be questioned by the Trustee or bump you out from filing all together. Now if you can trade it, the explanation is plain, you are broke and needed to reduce costs of operation for your transportation. In my area, I purchased a 10 year old Blazer with only 95K on it for about 2.3k. The kbb said it was worth 5k. Figure the fuel vs the mortgage and see where you may be better off.

[yoyoma51]

AngelinaCatHub, it is a Volvo S60 Turbo. I like Jettas too, however.

Shortly before we filed, we bought a pre-owned Volvo S60 Turbo for cash (using the federal exemptions, we could exempt it completely as we did not have any equity in our home).

Then we let the car we were leasing go back with 2 years left on the lease.

No questions from the trustee.

[danaf]

You can absolutely buy a new car and it's wise to do so before bk to get a good rate. But I'd try to make it 6 mos before filing. A few things to consider....1. - find out what your state vehicle exemptions are. You want to see if the value of the paid off car falls within your state's allowable exemptions. You also don't want too much equity in the new car when you file. I'm not so sure I'd put 10k down on a new car - that's equity that the trustee could go after. 2. Crunch the numbers first to make sure after unloading the SUV and buying a new car that you are not over $100 disposable a month. This is so you aren't pushed into a 13. Take the means test, do a personal budget, and fill out schedules I & J. You will need the means test IRS numbers which you can get off the us trustee website.

Or yeah - you can let it go in the bk as another poster said but again you want to make sure doing this will not leave you with a ton of disposable income.

[Frogge]

Another Example

I have a similar situation, we are about 6 months out from filing.

We have:
2007 Mazda CX-7, purchased 8/07 --14500 miles on it, owe about $4000 more than it's worth according to KBB private party value

1998 Toyota 4Runner, bought in 2001, paid for -- 111,000 mi, value $7000

We live in KS ($20K vehicle exemption) -- we need to purchase a 3rd vehicle for my teenager, & we are spending close to $500 in gas/month so were thinking of letting the Mazda go and purchasing 2 used cars that are good on gas. The 4Runner is modified for off-road to the point that it would not make sense to try and sell/trade so we're keeping it.

I'm not sure what to do because:
1) I need to keep showing the cost of monthly gas for the means test
2) I want a good rate on the cars but I think we'll have to stop paying creditors soon which will tank our scores
3) I don't want the trustee to take any of the cars but if the equity totals under $20K, are we ok? Or is that just 2 cars per household?

[lrprn]

I don't want the trustee to take any of the cars but if the equity totals under $20K, are we ok? Or is that just 2 cars per household?

We filed Ch 13 in Kansas. In our local court, we were allowed a car for every licensed driver in the household. The total equity of ALL our motor vehicles needed to be below $20K - luckily, ours were.

[dragonnfly]

We were amost in the same situation. We had a 06 Durango the payments were 585. the payment was left on the means and sch j, even though we have surrerendered it. We are getting a small car we can afford to drive somewhere. Already been approved. We are waiting for a letter in the mail from one of our mortgages that states our mortgage is current on payments. Our new payment is $258 the trustee didn't say anything. But my hubbys truck has 197,000 on it so I think that had something to do with him remaining quiet. Dragonnfly

[Frogge]

We were amost in the same situation. We had a 06 Durango the payments were 585. the payment was left on the means and sch j, even though we have surrerendered it. We are getting a small car we can afford to drive somewhere. Already been approved. We are waiting for a letter in the mail from one of our mortgages that states our mortgage is current on payments. Our new payment is $258 the trustee didn't say anything. But my hubbys truck has 197,000 on it so I think that had something to do with him remaining quiet. Dragonnfly

dragonnfly, so you held on to the Durango through your filing and 341, didn't reafirm, and now you are letting it go and buying another car, is that right? I'm a little confused, bear with me.

What do your mortgage pmts have to do with it? Proving to your auto lender that you are paying? Since we are not paying any longer to our OLD home as of this month, I'm wondering if I need to go ahead and get another car.. or wait until we file.

[dragonnfly]

We had the Durango until the day before our 341. They called that day and because they didn't go through the court they even asked if it was OK if they came and got it. They had sent our lawyer a letter asking for permission to contact us. They had a repo team working that night close to us and they said they would come here last and it might be about 3-5am before they got here. I put the keys in it and left it in the front yard by the road. Woke up at 5:30 the next morning and it was gone. We are keeping our house and the lender that gave us the best interest rate required the letter from the lender. Our snag now is we have a 3rd mortgage that we are getting voided, we have to get a letter from our lawyer about that one. There was another lender that didn't care if you were still in the house you were giving up, and yet another that if you were giving it up required you to be out of the house. This just occured to me.....I have these frogs around our pond that eat the dragonflies so behave. Dragonnfly

[Frogge]

We had the Durango until the day before our 341. They called that day and because they didn't go through the court they even asked if it was OK if they came and got it. They had sent our lawyer a letter asking for permission to contact us. They had a repo team working that night close to us and they said they would come here last and it might be about 3-5am before they got here. I put the keys in it and left it in the front yard by the road. Woke up at 5:30 the next morning and it was gone. We are keeping our house and the lender that gave us the best interest rate required the letter from the lender. Our snag now is we have a 3rd mortgage that we are getting voided, we have to get a letter from our lawyer about that one. There was another lender that didn't care if you were still in the house you were giving up, and yet another that if you were giving it up required you to be out of the house. This just occured to me.....I have these frogs around our pond that eat the dragonflies so behave. Dragonnfly

ok, I think I understand now. Thanks for explaining that! --and, BTW no worries-- I am a harmless, poisonous jungle frog. LOL