Question about car in NY..

[nychic74]

Hi, hoping that someone can answer my question about our cars in a chapter 7 bankruptcy.

My husband and I are probably going to file chapter 7. We have a house that we are underwater by about 50,000 and am going to give it up. Can't afford the payments and have put ourselves in about 50,000 in CC debt trying to keep up with the darn thing. We have a 2007 Honda pilot in his name, owe 10,900 on it. according to the KBB value it is worth around 18,000 on a dealer trade in. It is the only car we own. We do use a car that is my fathers and have used it as a backup for about 7 yrs.

We have nothing else worth any money with the exception a newer computer. Will they take the car away?

[nychic74]

After doing some research today I did find that there is a 2400.00 exemption for cars in new york. I am about 5500.00 over the exemption. YIKES!! is there anything I can do about this or am I going to be left without a car if we file chapter 7?

[DebtEnder]

New York has no wildcard exemption. The only think I see is the unused portion of the $5,000 allowed for personal property and tools of your trade, whichever is less.

http://bankruptcy-law.freeadvice.com/bankruptcy-law/new-york-bankruptcy-exemptions.htm

So if you have any sort of business where the car is needed, and you don't otherwise use any of your other exemptions for other personal property then "maybe" ie 5k plus the 2,400 will knock enough off to make it not worthwhile to sell.

Otherwise with over 5,000 in equity not covered by exemptions I think that to big an asset to ignore. Perhaps look into trading that car in and getting a new loan before filing.

[nychic74]

Thanks for the reply. I have been loosing sleep thinking they will take away our only car. I know its silly it is just a car but I have 3 kids to take care of and my husband commutes an hour to work.

If we traded the car in and got 2 reasonable cars on a car loan would that raise any red flags you think?

[DebtEnder]

If you are both filing and have a valid license you should not have an issue as long as you reaffirm the loans and have no equity, or at least under 2,500 for each. You can use 2,400 per car per driver. You can protect up to 4,800 worth of cars if you have it half and half between the 2 and you are both drivers.

So yea find 2 cars sell the one ya have for cash and put down just a few thousand down each and spend the rest to buy food, prepay medical/car insurance, deposit for a new rental etc etc.

The only red flag would be if you sold the car to friend or family for less then it was worth. Find a carmax and get a quote from them, or hell just sell it to em if ya want fast cash.

However I'm not a lawyer and I don't live in New York so take this for what it is

[nychic74]

Thanks so much for the advice. I went ahead and made an appointment with a BK lawyer for the 16th of this month. I will hold off until then. I am sure our credit is terrible by now so we will probably be paying a really high interest rate if we do end up getting another car.

I like the Carmax idea but the nearest one is about 60 miles from me....darn!!

[DebtEnder]

yearghh double posting....

[DebtEnder]

You could slap up an add in the newspaper or any of the half dozen used car sites, and probably get more cash out of it to boot as well. You got a couple weeks it sounds like, now is the time to plan.

Don't be like me and be days away from a civil suit judgment and house foreclosure for it to click in you ain't gonna make it....

[nychic74]

Yeah I think we were in denial thinking we could afford to buy a house. We kept hearing now is the time to buy or real estate always goes up its an investment. Funny thing is they would of given us much more of a mortgage but we stayed within a reasonable range, or at least we thought until we realized by the time we paid for heating, electric etc and had not much left for necessities at the end of the month.

So then came a mortgage that is almost 3/4's of our take home pay, all the cc charges and in 3 yrs boom no savings, no 401k, no money left on cc's,huge balances on cc's, a house that is at 50,000 underwater probably more, medical bills, husbands job laying people off he could be next, the list goes on.....

We realize now is the time to take action.

Sorry for the rambling I just feel so much better "talking" about. Thanks again!!

[DebtEnder]

Just glad I could help, hopefully

I've rambled enough on these forums, I think we are all used to it

[Lindsay]

I'm in a similar situation. We have about $4000 in equity above our exemption. Our truck is 5 years old and only has 5 more payments. I'm worried that the trustee will take it away and its our only vehicle. Neither of our jobs are on a bus route and I'm afraid that if we lose our vehicle, we'll both lose our jobs and end up homeless or on welfare. If the trustee decides to take it, does he ask for the keys/title at the 341 meeting? Do they give you the option to pay the difference to keep the vehicle? If so, is this usually demanded in one lump sum or do they give you a little time to pay it?

I'm in NY too.

[DebtEnder]

I would think you could always redeem the vehicle back. Your fiances after the filing don't really matter, so if you can come up with the cash to buy it then I don't think there would be an issue.

However if your over 4k over the exemption then that means you have over 6,500 in equity in that car. I would really talk to a lawyer before filing and see what options you might want to look into before chap 7.

I would look real hard into a good used car in that price range.

I myself have a car that I'm 3 payments away from being done with and it's worth about 4,500 on a trade-in minus diminished value of about $750 from a wreck it was in 4 years ago. Still have the insurance paper on it

Fortunately for me I live in Georgia which gives a 3,500 exemption so there's only about 2-300 bucks exposed in the car. Not really worth the effort. Otherwise I'd have been buying a new car real fast

And to answer the question at the 341 meeting no assets are ever taken that will be dealt with some time afterword. Trick is to make sure you convert any possible assets you have into exempt assets BEFORE filing. Sell the truck for cash, put a couple thousand on another car, use the rest of the cash for food and rent etc etc

[nychic74]

In Ny the exemption is 2400, can that be doubled if my hubby and I file together? I am unsure because only his name is on the car.

[DebtEnder]

it's 2400 per car, per driver up to 2 drivers. So if you have 2 drivers you could do 2 cars with 2400 in equity each, not one with 4800. It's not like a house where you can add both of yours to the total.