Question about car lein

[jbravo1224]

We might file bk in the future but right now we are trying to avoid it. I want to make sure that we make good decisions incase we would decide to file. We need a new car and my husband has horrible credit, I have decent credit but no job I just started back to school. We were thinking about taking a loan from his dad to pay for the car and pay him back with interest on a monthly basis just like a normal car loan. Is this considered a loan in the BK or would it appear that we own the car free and clear and would have to pay the equity in the car? Thanks!

[justbroke]

Is this considered a loan in the BK or would it appear that we own the car free and clear and would have to pay the equity in the car? Thanks!

Yes, this is considered a loan and will need to be listed in the BK. You would add him (your Dad) as a Creditor!

If you file Chapter 7, you can discharge the debt but continue to pay your Dad. If you file a Chapter 13, you can "schedule" the debt and make payments over 5 years.

You would treat it just as any other debt. If you have Equity, then you will claim an exemption for that equity in the car (difference between what was paid for the car, and what you owe Dad on the loan). Most States have decent exemption amounts for cars. I don't think you'll have any issues. The key is that you need to list this as a DEBT in your Bankruptcy petition.

Either way, it sounds good to me on my initial read.

Please Note that I'm not an Attorney.