Buying a 3rd Car....Good or Bad?

[tools2teach]

My wife are planning on filling for Chapter 7 sometime next year around November or December. We didn't pass the means test, but we are taking the necessary steps to improve our chances. We have to leased cars we want to give up. My question is, we want to finance a 3rd car now and have plans to keep it after we file. Would this hurt us, raise red flag? Or good because our expenses go up?

Keep in mind this is 10-11 months down the road, so I really don't see why this would hurt us.

[jribe]

it shouldn't matter at all. Especially with such a long time frame for filing. Many people "plan" their bankruptcy's and there is nothing wrong with that.

[TEW]

You are only going to be able to claim 2 cars. are you planing on getting rid of one before you file?

[tools2teach]

We plan on getting rid of both our 2 cars when we file and keeping the 3rd car. It is just my wife and I.

[tools2teach]

So....I can only claim 2 cars as expenses and not the 3rd car?

[TEW]

only 2 cars

[AngelinaCat]

It depends on the state you are in as to the exemptions you are able to claim. In some states you are able to claim the Federal exemptions (as for Income Tax) if the exemptions are better than the state's. For instance, in Florida where I live, (can't claim any Federal) the state allows up to $1000.00 value for a car. So if I owned one worth more than that, I would have to sell it--or the trustee would--and the $1000.00 would be given to me, but the trustee keeps the rest for my creditors. Does that help carify it any?

Good luck.

[tools2teach]

We live in the state of California. I am not really sure how the exemption laws work here, but I thought it was all based on the I and J form (income vs. Expenses). I guess the 3rd car won't fall under a expense since I can only claim 2 cars.

[TEW]

It depends on the state you are in as to the exemptions you are able to claim. In some states you are able to claim the Federal exemptions (as for Income Tax) if the exemptions are better than the state's. For instance, in Florida where I live, (can't claim any Federal) the state allows up to $1000.00 value for a car. So if I owned one worth more than that, I would have to sell it--or the trustee would--and the $1000.00 would be given to me, but the trustee keeps the rest for my creditors. Does that help carify it any?

Good luck.

You can not claim more then 2 cars for expenses that has nothing to do with exemptions

[tools2teach]

What if I was to get rid of the one car and lease a more expensive car......would this work? Do you think there would be any red flags by doing this?

[TEW]

What if I was to get rid of the one car and lease a more expensive car......would this work? Do you think there would be any red flags by doing this?

how close are you to a 13?

[tools2teach]

We are trying for a chapter 7. We are about a $150 over the means test.

[jribe]

What if I was to get rid of the one car and lease a more expensive car......would this work? Do you think there would be any red flags by doing this?

bad idea. It most likely would raise a red flag, and california has a certain amount you can deduct on the means test for the car. If you go over that "allowance", you will have less "disposable income" technically- but they won't consider it. I believe it's around $400 -but you'd need to check.

[TEW]

We are trying for a chapter 7. We are about a $150 over the means test.

the means test is only the first part have you looked at the Schedule I and J thats the rest of it

[tools2teach]

Did the I and J form ourselves and even hired a lawyer. We are definitely over by a couple by $100 give or take.