Harley

[jb300]

I need opinions here.

I am still in the process of choosing the attroney. One attroney says "You will get to keep the bike"

The other attroney says " this is a luxury item and the trustee may make you choose between the BK and the bike"

The whole picture.... 2006 nighttrain, upside down in loan because that bike was gotten with a trade of another new bike 2 months old. (Bad trade, nothing to do after the fact)

Payments 543 a month, owe 25, 500 on it yet. BF is on loan too. He is having a fit over this. I think we can protect it now because his name is on it too by just having him pay for it but he owes the IRS A LOT of money in back taxes. Right now he won't be able to pay them much and bike not worth much but in a few years will be another story. I think this issue will come up down the road with the IRS.

Thoughts for me on the BK, which attroney is more right.

[AngelinaCatHub]

25K for a motorcycle is a luxury. It is not good transportation in that you can buy a good used car for about 4K. My vote is that the second lawyer may be correct. It of course is a crap shoot as to what the Trustee would say. 'Hub

[Flamingo]

Go to attorney 3 for another opinion. I too think the bike could be considered luxury unless you can possibly argue it is used daily for work transportation, etc. and depending when the vehicle was obtained (it's a 2006 - was it obtained in 2006 or more recently) and that is one high payment for a bike. Can you truthfully afford it? Also your BF's name is on the loan. Your BF needs to work out a payment arrangement with the IRS as to his back taxes and not worry about keeping this bike if he cannot afford to pay those taxes.

[HHM]

Ok, let's back up. There are two and one/half issues here
1. The Bike as an Asset in BK
2. The payment as an Expense in BK.
2.5 The Bike Lender.

As an Asset: If the bike is upside down, no worries, the BK trustee is not going to do anything with it, so you can keep the bike.

The Bike Lender: So long as you (or someone) keeps makeing the payment, the lender is not going to care, so you can keep the bike.

As an Expense: This is where your challenge lies. The 2nd attorney is probably looking at whether the BK court will allow you to claim the expense, it is over the IRS allowed ownership cost for transportation. But at the same time, it is a secured debt and you are allowed to deduct secured debts on part 2 of the means test. Let's assume the court disallows the expense, would you still qualify for a chapter 7...if yes, this issue doesn't matter, if no, then you will have problems. If the bike was your primary means of transportation, you have a strong argument, if it is not, then you are in a weak position.

[jb300]

You are right the bike is no asset.

I will have to list it as an expense because my name is on the loan I am assuming BUT he pays the payment. That is also his only vehicle in his name and he does use it for work. It was a brand new bike in 2006 that we made a stupid trade on in my opinion.

We got screwed and didn't realize it until later. We were making much more money then and I didn't know about the other issue at the time. Now I know the whole story.

As far as me and the BK, this expense shouldn't be an issue. I think we have to declare that we are a 2 person household even though we aren't married. We are self employed and our taxable income is less than 25000, it might even be closer to 20000. I have a lot of business deductions I am able to claim.

[StartingOver08]

Remember, although you are having to use his income, you can show that he is the one making the payment too (right?). If you have that documentation it may make a difference as to whether you can keep it or not.

Have you BF make an installment agreement with the IRS - if you do the installment agreement prior to your filing, the taxes should be a non-issue as you are the debtor and he is not (if I remember your situation correctly). Also, it will handle the IRS situation so he does not have to worry about the IRS knocking on the door! You can make a payment arrangement with the IRS for up to 5 yrs (not recommended unless you are going to make larger payments than the minimum).

[jb300]

Well we are having to wait right now for the IRS to go through the 8 years of returns he had not filed. We have heard back on one year and it could be months before he hears anything and we are talking 80K plus with interest and penalities I bet.

Not to mention that the state hasn't even been dealt with yet they sent him a letter but were basing in on the figures before he went ahead and filed the past years returns, that figure was 38K.

So he is going to have to deal with this Harley issue again I am afraid. Right now I just have got to get this BK dealt with. I love the bike but I also am realistic about it where I don't feel he is.

I am going to be OK with the IRS this year. I have the money that I still owe them already set back and will send it in next week.

[HHM]

I don't think you will have too much trouble in the BK. If he pays for it and he is not filing, that is simply one of his expenses. The court CANNOT disallow a non-filing spouse expense.

[floridian]

well, you sure are getting different advice than i got about my motorcycles....

my lawyer said it is a luxury item and will go, end of story! he said there is no way a trustee will let me keep it and dont even think of using the payments as an expense..

i have tried my best to come up with a scheme to keep it and is one reason that i havent filed yet... im going to ride it all summer, then if i lose it, oh well....

i have one bike that im upside down on and one not... the one i have equity in is thru a CU that i owe a deficiency to... the lawyer said that as long as i keep making payments, they may not come for it.... however, when the loan is paid off, they may not give the title until the other deficincy loan is paid to them....

but, if im put in a 13, i will be so broke that all i can do is listen to the radio...

if you file bk, i dont think it will be so easy to get another bike either... harley used to finance anyone... now they will insist on 20 percent down...

[jb300]

Well for me I have no choice I have to file. I can't overcome the debt I am in any other way. The only thing here is that the bike and the loan is in his name also. I can't help it if HD comes after him, but as long as he makes the payments he should be ok.

Now the bigger issue I think he has down the road is that right now he is uncollectable from the IRS but they aren't going to just walk away from the kind of money he owes. They have 10 years to collect and I personally think that as the Harley becomes more valuable over time they will come after it unless he can get an offer in compromise.

[floridian]

harley becoming more valuable over time?... i think not...
you could say that ten years ago, but not today.. i have owned 12 new harleys over the years and now they depreciate so fast you cant give them away....
i had a new roadking, one of harleys best sellers and had 25k in it... it sold on ebay for 12k and i was luck to get that... i dont know how the sales are in your area, but in florida they are pathetic... harley stock is in the dumpster too...
will it come back? may so, maybe not...one of my friends who owns a dealership, says that the babyboomers who bought harleys are getting old and the company is worried..

[jb300]

You honestly don't think that when that bike is paid for it won't have any value that they would come after it? I always thought that HD bikes kept some value.

I just can't believe with all he owes that he will just walk away from all this debt and not have to pay anything.

[floridian]

i dont know what model you have, but just a wild guess, ill bet you financed it for 72 to 84 months to have a payment like that...it would depend on your interest rate i guess...

say it is a desirable model, like an 09 ultra, that seems to be in demand right now.....you wont even break even on the depreciation until you are half way or more thru the loan... if it is a less expensive model like a softail or dyna, you are toast....

if its got a lot of add on chrome, that adds very little to the retail resell value...

if it has a lot of sentimental value to you, like mine does, i know that giving it up is stressful... as an investment, its a time bomb...