Selling an exempt car before Chapter 7

[questionsGA]

We recently learned that our best option is to file Chapter 7. Just before, we had someone tell us that he wants to buy one of our vehicles, which is completely exempt. I was going to use the money to pay most of a credit card balance. I'm afraid that selling it before bankruptcy will be worse for us than not selling it until after the bankruptcy is discharged.

So, my question is if we do sell the car, then do we have to use the money to pay off debt since the sale would be about 30 days before we File? I know we could legally use some of it to pay an attorney for the Chapter 7, but that still leaves about $1800 dollars.

If the guy shows up to buy it, I hate to renig on a deal; but I don't want to do something that will hurt us.

Thank you.

[bkfdrusa]

If you sell it before you file, you need to explain why did you sell it and where the money went. I would not recommend paying the debtors. You will not list that in your schedules then. If you list that as exempt then wait until discharge to sell it.

[questionsGA]

The reason we want to sell it.

Thank you for your post. The true reason we want to sell it is that my husband is doesn't want to maintain 2 cars any longer and insurance, etc. We only need one vehicle since he is at home. Although it is a good car, it is a 1993. If it breaks, then that means a big repair bill. Overall, we figured we could save money and pay most of the credit card off.

If the buyers shows up this Saturday and we honor the deal, would our explanation to the Trustee be (is and will be truthful), that we used the money to pay an $825 emergency outside sewer repair done last week and pay the attorney fee and court fees for Chapter 7, and then maybe pay a "little" on the card and our HELOC just to make it look good?

Thanks again.

[bkfdrusa]

I think you are ok. I am also worried like you about my case. I sold my car in Mar 2009 and filed in June 2009. My attorney says I am too much worried and he handled too many cases like that. Just have the explanation ready when the trustee asks you.

[questionsGA]

Thanks for your info

Thank you for your post. I appreciate your information.

[LuciluS]

Do NOT payoff a Credit Card if it is over $600 within 90 days of filing bankruptcy as the Trustee will possibly go after the money and it could might delay your Discharge & Closing.

Our BK Attorney told us the only payments of more than $600 in that 90 day period, are payments you intend to keep. In our situation, we are planning on keeping the house around $924 a mth & hubby's truck around $489. Even a medical bill cannot be paid if over $600 in that 90 day window.

I believe you can sell the vehicle, but it must be at Fair Market Value & cannot be sold to an insider (family). Yes, you must account for the $$ you received. Stock up on Canned Goods, Paper Towels, Toilet Paper, & etc. Just don't pay off that credit card if over $600. Keep all receipts that total the sale of that vehicle.

Credit Cards are normally the easiest bill to be 'wiped out' during your bankruptcy. O, forgot to mention, if you have charged or made a Balance Transfer within that 90 days period, our BK Attorney told us to make the minimum payment for 3 mths & add a bit to the payment. That's when we met with him late last Sept. and planned on filing in Dec. or Jan.

We had a Motorhome and just could not afford the insurance to keep it. I called several times in Oct. & Nov. & asked our Loan Agency to please come get the motorhome. They finally picked it up late Nov. & sold it at an auction. In Dec. we received a letter stating the defiency was over $14,000. Nothing else received until a phone call about 3 weeks ago. All she wanted was our Attorney's name & Phone #. The day it was picked up I called our insurance co. and told them to cancel the insurance. They asked me did I sell it. I said it's no longer in our possession as I didn't want to tell our Insurance Agent we were filing BK. Eventually they will find out & it will probably be in Dec. as our homeowner's policy renews on Dec. 20th.

Now our BK filing is 9/30/09 and we stopped paying on most of the CCs in late Sept. or Oct. We've had lots of phone calls and a couple of forms letters received in the mail. I think most of our CCs' are in the hands of Collection Agencies.

Why haven't they filed a Judgement? They have ways of knowing who you owe along with your Yearly Income. I receive Social Security Disability Income and my husband has been ill & missed over 2 months of working in the last year. They would be wasting their time to file as our Attorney would answer & delay the hearing after 9/30/09, date of our filing.

[questionsGA]

One last question on receipts for car-sale money

Thank you, Lucilus, for your informative post. That kept us from doing a huge mistake of paying too much after selling the car.

Are the Trustees picky about dates for receipts? We had a huge emergency sewage pipe issue a week ago for a little over $800.00. The car will be sold this Saturday, a week and 2 days later. I would like to count that receipt as being covered by the car money. Technically, we could say we used money to pay the repair bill that was suppose to go for living expenses and the car-sale money replaces that. Do you think that would fly, or are we playing with fire?

Thanks.

[LuciluS]

The more receipts you have, the further you bury the Trustee, if asked upon by him, in paperwork, the less time he scrutinizes everything.

So make some small purchases of paper towels, toilet paper, etc. If you can, go every day/night and purchase items & keep the receipt. I would bury that large receipt in the middle of the stack & don't place the other receipts in date order.

But, if you have already paid that bill, & then receive the monies on the sold vehicle, spend it, elsewhere as you cannot have much monies on hand the last day of the preceding month of date of filing. In other words, we are filing 9/30/09 as small town BK Attorney and he files last business day of each month. The snapshot picture of our Bank Account is 8/31/09. I intend to have less than $100 in the bank on that date.

Does the one vehicle need any maintenance? We put new tires on our vehicles with our 2008 income tax refund. Are you keeping your home? We are & my son owns a construction business. I have 2 leaky faucets in our home & a privacy fence that needs a lot of work including a 4 ft gate on one side & an 8 ft. gate on the other side need to be rebuilt.

Need to go to the Dentist? Need to see a doctor for any reason. Taking RXs which require bloodwork every six months. Put your 'thinking cap on'. I'm sure you can come up with legitimate ways to spend that money. Just don't pay your family any monies or you will have to wait 1 to 2 years to file.

I'm having to do about the same as my husband is an over the road truck driver and spends money out on the road. It was so hard to finally get him acclimated to get a receipt for anything. You would be suprised how many receipts he brings home each week.

Luci

PS I sorta got my paragraphs out of order, but tired & didn't want to mess with them

[questionsGA]

Great Ideas for receipts

Thanks again so much. Those are great ideas for receipts. Our pickup does need new tires, so I think will go ahead with those for sure.