I apologize in advance for the length of this post.
I filed for Chapter 7 on 9/15. I originally stated my intention was to reaffirm my car loan. I have a fairly new car - a 2009 Mazda, with a 100k mile extended warranty - and my payments are approximately $362 per month. I can afford this without any issues. The problem lies in my Schedules I and J. I show that I am -$298 per month on an IDEAL budget going forward. This budget includes stuff that I obviously have not been able to afford in the past (such as $150/month for clothing for a family of 3, $625 for food, etc.). I can obviously live cheaper than this, I've been doing it for quite some time. I purposely needed to show as upside down on my monthly expenses because I have $366/month in 401k loan repayments that my attorney *thinks* will be accepted as valid expenses (my fear is - what if they're not??). Also, I show $300 per month for medical expenses. I have a child with severe asthma and he is on 5 prescriptions per month, plus just general co-pays for medical and dental for the family all add up. Right now, I get his prescriptions free from my EX-father-in-law - but there is NO guarantee every month that this will be the case. My divorce was not very amicable, and my ex-father-in-law has never been involved in my children's lives. At any point, I could have to pay full price for my sons' medications, so I need to budget for that - and my attorney agreed.
I received reaffirmation papers from my bank for my car loan late last week. In the papers, I have to state my monthly income, my monthly expenses, and the amount left over every month that can be used to pay the car payment. I talked with my attorney's assistant, and she said this has to match my budget that was turned in. Problem is, that budget shows I don't have the money to make the car payment. There is a section where I can write in how I'd manage to make the payment (i.e. increased child support payments, getting a raise at work, paying off 401k loans in future), but the assistant was very adamant that I make sure it doesn't look as if I'll have enough money in the future that I would be able to afford to repay my creditors. I asked, "What exactly should I write on these forms?" and was told that they can't tell me that. Isn't that what I'm paying them for?? She didn't understand that my budget was an IDEAL budget - what I'm hoping for, within reason, after discharge - she was stuck on, "Well, how do you expect to pay your car payment?"
So, after all those long-winded facts...my question is whether to keep my car or not. If I decide I want to keep my car, how do I fill the reaffirmation papers out? I spoke with my father, and he is willing to give me $8-10,000 cash to buy a nice, used vehicle, and then I can pay him back interest free over 1-2 years. I wouldn't have previously considered this, but the more I think about it, the more it makes sense to make a truly fresh start. I'd have no car payment at all in a year or two, and could save that money each month as well.
What do you think the best course of action is?
If I decide to let my car go, how do I go about keeping it long enough to find a good, used car? I don't want to be rushed into buying a car that isn't going to be safe and reliable for my family.
If I let my car go, does my Schedule J change to show NO car payment at all? If it does, I'd be +$60 per month on my budget - is this anywhere near a danger zone to be pushed into a Chapter 13?
Thank you for taking the time to read this, and thank you, as always, for this helpful forum!
I filed for Chapter 7 on 9/15. I originally stated my intention was to reaffirm my car loan. I have a fairly new car - a 2009 Mazda, with a 100k mile extended warranty - and my payments are approximately $362 per month. I can afford this without any issues. The problem lies in my Schedules I and J. I show that I am -$298 per month on an IDEAL budget going forward. This budget includes stuff that I obviously have not been able to afford in the past (such as $150/month for clothing for a family of 3, $625 for food, etc.). I can obviously live cheaper than this, I've been doing it for quite some time. I purposely needed to show as upside down on my monthly expenses because I have $366/month in 401k loan repayments that my attorney *thinks* will be accepted as valid expenses (my fear is - what if they're not??). Also, I show $300 per month for medical expenses. I have a child with severe asthma and he is on 5 prescriptions per month, plus just general co-pays for medical and dental for the family all add up. Right now, I get his prescriptions free from my EX-father-in-law - but there is NO guarantee every month that this will be the case. My divorce was not very amicable, and my ex-father-in-law has never been involved in my children's lives. At any point, I could have to pay full price for my sons' medications, so I need to budget for that - and my attorney agreed.
I received reaffirmation papers from my bank for my car loan late last week. In the papers, I have to state my monthly income, my monthly expenses, and the amount left over every month that can be used to pay the car payment. I talked with my attorney's assistant, and she said this has to match my budget that was turned in. Problem is, that budget shows I don't have the money to make the car payment. There is a section where I can write in how I'd manage to make the payment (i.e. increased child support payments, getting a raise at work, paying off 401k loans in future), but the assistant was very adamant that I make sure it doesn't look as if I'll have enough money in the future that I would be able to afford to repay my creditors. I asked, "What exactly should I write on these forms?" and was told that they can't tell me that. Isn't that what I'm paying them for?? She didn't understand that my budget was an IDEAL budget - what I'm hoping for, within reason, after discharge - she was stuck on, "Well, how do you expect to pay your car payment?"
So, after all those long-winded facts...my question is whether to keep my car or not. If I decide I want to keep my car, how do I fill the reaffirmation papers out? I spoke with my father, and he is willing to give me $8-10,000 cash to buy a nice, used vehicle, and then I can pay him back interest free over 1-2 years. I wouldn't have previously considered this, but the more I think about it, the more it makes sense to make a truly fresh start. I'd have no car payment at all in a year or two, and could save that money each month as well.
What do you think the best course of action is?
If I decide to let my car go, how do I go about keeping it long enough to find a good, used car? I don't want to be rushed into buying a car that isn't going to be safe and reliable for my family.
If I let my car go, does my Schedule J change to show NO car payment at all? If it does, I'd be +$60 per month on my budget - is this anywhere near a danger zone to be pushed into a Chapter 13?
Thank you for taking the time to read this, and thank you, as always, for this helpful forum!
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