Is there anyway around this???

[GreenLotus]

OK, my husband and I went for our first sit down with the lawyer to discuss what we need to do. We knew it would be around $1500 - $1700 for lawyer fees and such. We don't have that right now but we knew that was coming.

Here's our problem. We have a 2004 Pontiac Vibe.. our only car & its paid for. The lawyer said under NY state law that we can only have a car worth $2500 and our is worth 6 grand or something. Now we can let them take the car and sell it and they will give us $2500 or we can pay the difference which she said she could talk them down to us oweing around $3000 . ARE YOU KIDDING ME?? We both nearly hit the floor! So we have no money, we need to file bankruptcy and we now need to come up with $5000 to do this and keep our car.

My question is there any way around this?? I don't want to commit fraud.. I'm not asking for stuff like that but does anyone have any advice??

Thanks so much for your time!!

[optimistic1]

There is exemptions to your property based on the State Bankruptcy Law. Your attorney is correct in noting that your value of the car is over the exemption leaving you liable.

Here is what you could do.

Go trade the car in, and get a new one with a loan, not only would it you qualify better for a Chapter 7, but then you wouldnt have this problem anymore.

How are you determining the value of your car?

Value it at fair condition, unless the court requires a certified appraisal, how would they know how good of condition it is in.

That should then, make it worth less.

[welovedis]

Green Lotus-
First just wanted to say hi to a fellow NYer. What district are you in?

We consulted with an attorney prior to filing and decided to sell our 2007 Toyota Corolla--we had put down a huge chunk of money on it from an inheritance check I received--and we had almost $8K of equity in it. We ended up selling it back to the dealer we bought it from as they gave us an excellent price. Then we bought a used car with the cash, but stayed in the $3500 range (from a dealer so we could at least get a short warranty). Book value on our car in fair condition is $2400 which is what we were told we could exempt.

We then had to account for the remaining ash that was in our account from the sale so we used it to pay off small medical bills, pay for a home repair that was unforseen, pay our mortgage, pay on the other car we are keeping and buy groceries. We essentially paid our monthly bills off that money until it was gone.

Is there any way you can sell the car and buy something used with the equity, then use the remainder for living expenses until you file?

If not, you have to decide if it is worth it to keep the car and pay the amt above the exemption. I *thought* that you have at least one year to pay that amt back to the trustee, if memory serves me right. Depending on the valuation it might be lower than the 6K, what valuation are they using? Our attorney said you use the "Trade In Value" and use "Fair" (unless the car is mint) for the valuation. I punched in some basic info on Kelley Blue Book and a base model with about 70000 miles is coming up with a fair trade-in value of $4225. So you really need to go online and put in your particulars to see what that valuation is.

[katie]

I agree with optimistic if you can trade in and get a new one before filing. I have seen recommended on here to pay a payment or two and then file in a couple months.

In our case, we traded in my SUV in fall of 2007 and bought DH a new truck as well when things were going really well with my husband's business. Then when everything went downhill in the fall of 2008 and then this month we realized we have no choice but to file probably Chapter 7. Before we went to talk to an attorney, we were really sweating things thinking we should have kept my SUV (which would have been paid for now and have a value of $10-15,000) and when we got in there and they realized we had no equity in our vehicles yet and were upside down since they were so new - we should be able to keep both vehicles. Basically if we had my old SUV paid off - we would lose it or be in the same situation as you. Strange how this stuff works.

My attorney also used "fair" on kbb.com to get values of our vehicles.

[soleprop]

does NY not let each party in a bk filing claim the vehicle exemption? Example - in MN each party to the filed bk can apply the exemption - if you both own the vehicle in minnesota, you both get to apply your exemption to the vehicle...effectively doubling the exemption.

unsure if it's the same in NY, reads like it isn't....which would be a bummer.

[optimistic1]

Its possible, but I would think it would apply to each persons own and seperate vehicle, under the notion that they own 2.

Im sure the attorney could figure out that one.

[TEW]

does NY not let each party in a bk filing claim the vehicle exemption? Example - in MN each party to the filed bk can apply the exemption - if you both own the vehicle in minnesota, you both get to apply your exemption to the vehicle...effectively doubling the exemption.

unsure if it's the same in NY, reads like it isn't....which would be a bummer.

I was thinking the same thing. check back with your lawyer. Ask if the $2400 is per filer.

[welovedis]

Its possible, but I would think it would apply to each persons own and seperate vehicle, under the notion that they own 2.

Im sure the attorney could figure out that one.

It does apply to each filer's own vehicle. We are lucky that we each had one vehicle titled/registered in our names, otherwise we would be out of luck. The exemption cannot be combined on one vehicle.

[soleprop]

oh.

[bkchap7filer]

Does your state have any wild card exemptions you can use towards a car? Also, what does the NY law say about homestead? Can you use any leftover homestead for a car exemption? You can in some states.

[drowningNdebt]

when valuing a car do you go off of private party value or trade in?

[bkchap7filer]

My attorneys said we had to use private party for the fairest market value

[StartingOver08]

when valuing a car do you go off of private party value or trade in[/B]?

Depends upon what your district requires. In Tenn they use Black Book value less 30%. However, in my district, S. FL, we have to use kbb RETAIL value, excellent condition (even if your vehicle is not excellent) (Talk about an impossible number!) So find out what your district uses so you can work with those figures. Your attorney will know which valuation your district uses.

[optimistic1]

I wish I could use black book value, most people have never even heard of it, my payment would be like nothing if I used that value for the cram.

[2Bshinyandnew]

At filing time, I'm planning on taking my paid-for 04 Hyandai to CARMAX and getting a printed quote on what they would offer to purchase my car. They go over the car and put in writing any visible body damage and problems, as well as their purchase offer. I did this with a Honda Accord I sold last year and the CARMAX offer was $4000 less than KBB private party/fair condition.

I realize that CARMAX is offering trade-in value. My plan is to offer to buy the car back for whatever CARMAX offers, minus $1000. If the trustee says no, I will give them the keys and take the $1000 FL auto exemption.

If I were the trustee I wouldn't want to be bothered trying to sell a used car that has about $1500 worth of body damage, per Allstate (my 18 year old daughter and I share it, 'nuff said!) and is valued at $5500 KBB private party in fair condition, especially if the filer is offering something for it.

$5500 - $1500 damage - $1000 FL auto exemption = $3000 max I'm expecting to have to pay to trustee for this car. If CARMAX is less than $3000, I'll offer the CARMAX amount less the $1000 exemption.

Whatever I offer is going to come with the convenience for the trustee of not having to store it, auction it, etc. It looks terrible but drives fine. If I were buying a used car from a private party, I sure wouldn't consider paying KBB/private party/fair condition for this car. I expect the trustee will be looking at the bottom line. If not, he/she can have the car. I won't overpay, nor will I pay more than what I realistically believe the trustee will get for it, less my $1000 FL auto exemption.