Buying a new car b4 filing via home equity? Using cards for groceries.. wait period?

[mm2009]

I'm trying to determine the best course of action here, searching for some opinions prior to retaining my lawyer..

I have a 1999 grand prix gt with 200K miles on it, its averaged $200 per month in repairs over the last 3 years and is in need of more (its paid off, not worth much)...

I probably will offer this car as a temp car for my stbxw (divorcing/seperated etc)..

I was thinking chevy 2010 equinox, as we have 2 kids and it would be easier and justified (getting in and out):

Questions related to this are:

If i get a regular car loan, do i then have to wait 3 months before i can stop payment on my other credit card debt (cards)?

I was contemplating a home eq. line of credit, real good rate, low payments, which i can double up in a year or 1.5 years when i'm financially more stable.. but i fear the hearing judge will say, ok you spent $26K on a new car using the house equity, you must pay your creditors $26k to be able to procede (after i would have already stopped paying on my cards for a month).. is this a likely outcome, or would i be safe?

The other idea is to take a small 8k equity loan, use 4k down and the other 4k to offer up a settlement on my divorce mess.


Finally.. i dont have much credit room left, but if i were to put about $200 each week till it was used up on a credit card, to help offset some struggles, would this be justified, or would i also have to wait 3 months from last use on card to be able to file and get a hearing date?

The goal would be to establish the new vehicle and stop payment on my cards asap after that (retain at same time), otherwise ill be even more upside down than i already am.

Any thoughts.

[jribe]

if you buy a car with home equity before you file- the car will have no lien against it. BAD IDEA. Here's why: the trustee will take it. Unless you have enough exemptions to cover 26k for the car, and anything else you own and want to keep.

I am also assuming you plan on keeping the house?

Best bet, if you need a new car is to just get a loan for a reasonable used car that would fit your family's needs and but 2-3k down. You could put 2-3 down on it from the home equity- but again, you'll need to cover the equity in the vehicle with your exemptions.

Are you already approved (not prequalified) for the HE Line? Right now, most are very strict on lending... Just curious.

You can buy a car before filing, you don't have to wait a specified amount of time. A car is a necessity for most people (unless there's good mass transit) and just know that you'll likely have to reaffirm the car.

I'm trying to determine the best course of action here, searching for some opinions prior to retaining my lawyer..

I have a 1999 grand prix gt with 200K miles on it, its averaged $200 per month in repairs over the last 3 years and is in need of more (its paid off, not worth much)...

I probably will offer this car as a temp car for my stbxw (divorcing/seperated etc)..

I was thinking chevy 2010 equinox, as we have 2 kids and it would be easier and justified (getting in and out):

Questions related to this are:

If i get a regular car loan, do i then have to wait 3 months before i can stop payment on my other credit card debt (cards)?

I was contemplating a home eq. line of credit, real good rate, low payments, which i can double up in a year or 1.5 years when i'm financially more stable.. but i fear the hearing judge will say, ok you spent $26K on a new car using the house equity, you must pay your creditors $26k to be able to procede (after i would have already stopped paying on my cards for a month).. is this a likely outcome, or would i be safe?

The other idea is to take a small 8k equity loan, use 4k down and the other 4k to offer up a settlement on my divorce mess.


Finally.. i dont have much credit room left, but if i were to put about $200 each week till it was used up on a credit card, to help offset some struggles, would this be justified, or would i also have to wait 3 months from last use on card to be able to file and get a hearing date?

The goal would be to establish the new vehicle and stop payment on my cards asap after that (retain at same time), otherwise ill be even more upside down than i already am.

Any thoughts.

[mm2009]

if you buy a car with home equity before you file- the car will have no lien against it. BAD IDEA. Here's why: the trustee will take it. Unless you have enough exemptions to cover 26k for the car, and anything else you own and want to keep.

I am also assuming you plan on keeping the house?

Best bet, if you need a new car is to just get a loan for a reasonable used car that would fit your family's needs and but 2-3k down. You could put 2-3 down on it from the home equity- but again, you'll need to cover the equity in the vehicle with your exemptions.

Are you already approved (not prequalified) for the HE Line? Right now, most are very strict on lending... Just curious.

You can buy a car before filing, you don't have to wait a specified amount of time. A car is a necessity for most people (unless there's good mass transit) and just know that you'll likely have to reaffirm the car.

This all makes good sense.. actually yeah, i've revised that idea, thinking i'd definitely just do say 8k in home equity, use 3-4 for down payment, and rest to stbxwife...

Exemptions.. i'm still unclear on how that works..

IE: my one appraisal shows my house owed(109k)-value of newer appraisal(140k) has 30K in equity or so.. but it seems i may be filing as single, wife not interested, so the (exemptions)? is 20K for single in PA, 40K if married.. if i'm understanding exemptions..(2005 appraisal was 117)

what my lawyer initially said was i can take a chance, (not doing home equity), goto hearing, testify i think the house is only worth say a max of 128k or 130k (right around the 20k limit).. or.. i can get a so called "frugal" new appraisal hoping it comes in lower..

So is this 20k/40k, the exemptions?

If i put 8k in a home equity loan, use 4k in cash, the rest towards car.. does it mean that i've lowered that exemption by 4K at least.. so now i'm at 26K, still 6K over if i dont testify that the house is worth less or get an appraisal.?

A little confused on the exemption thing/how the home equity would affect that.

[StartingOver08]

If your appraisal is older than 90 days then the information is not really accurate. When did you get your last appraisal?

The exemptions for PA are here http://www.legalconsumer.com/bankrup...aw.php?&ST=PA# You have a choice between either State of Federal Exemptions. If you have equity in your home, you might want to consider using the Federal Exemptions rather than the State Exemptions. This is something you want to discuss with your attorney.

[mm2009]

If your appraisal is older than 90 days then the information is not really accurate. When did you get your last appraisal?

The exemptions for PA are here http://www.legalconsumer.com/bankrup...aw.php?&ST=PA# You have a choice between either State of Federal Exemptions. If you have equity in your home, you might want to consider using the Federal Exemptions rather than the State Exemptions. This is something you want to discuss with your attorney.

I think its real close to to 90 days actually.. so perhaps i can just say, that appraisal was 90 days old, i had one done in 2005, and based on recent sales in the area, i feel, 129 is the sale price (20k filing single under PA).. i couldnt find actual figures on what pa vs federal would be on that link, but i only glanced?

Can the hearing people also look at the car i buy and say, well, did you really need an SUV vs a small 4 door.. DENIED etc? (then my credit is screwed b/c i stopped paying etc).

I think the Suv style vehicle is justified, as its not much more than the other cars i can fit into (i'm a really tall guy, so finding the right size is hard, plus with 2 kids, it has its benefits).

If my wife would just join me in this endevour, then it would be easy i think.

I'm still also not sure, if i should keep throwing groceries on the credit card or not, we are so tight now, i dont have much choice, but dont want to have to wait 3 months before i can actually file (i'm guessing since the charges are $200 or less, and i can only do a few more, and the next credit due date, it will be paid, minimums, then i'm ok, as long as i put something back on the card, showing i'm paying it?).

[Calthius]

I would look into a Equinox that is used not brand new. (Just a Suggestion) We had stopped paying on all of our credit cards for about 6 months when we purchased a good used vehicle (08 Uplander) that was under factory warranty. Then we filed Bankruptcy 15 days later. We did put 2K down on it and didn't get the best interest rate, but we did get a really nice vehicle that will last us a while. This never came up at our 341 the only thing we were asked is if we were reaffirming on it.

I would think that they may question the purchase of a brand new vehicle but not a used one. Plus as soon as you drive it off the lot you lose gobs of money.

[mm2009]

I would look into a Equinox that is used not brand new. (Just a Suggestion) We had stopped paying on all of our credit cards for about 6 months when we purchased a good used vehicle (08 Uplander) that was under factory warranty. Then we filed Bankruptcy 15 days later. We did put 2K down on it and didn't get the best interest rate, but we did get a really nice vehicle that will last us a while. This never came up at our 341 the only thing we were asked is if we were reaffirming on it.

I would think that they may question the purchase of a brand new vehicle but not a used one. Plus as soon as you drive it off the lot you lose gobs of money.

Yeah its true on the used, however, the 2010 model is light years ahead of the 2009 model unfortunately.. i've grown to really like it after testing it.. fitting in cars is an issue too, this one is perfect.. i've also "dumbed" the car down a bit to make it less money.

I did the research b/w buying slightly used and new, and i really dont think in the long run there is much benefit, at least for what i was looking at.. i also thought about going with a 5 year old van, but that had 78k in miles, if it hits 100k like mine did, since then i've averaged $200 a month in repairs almost.. making a $200 payment $400, price of most new things.

Hopefully that reasoning, if needed will be good enough for them (going to discuss with my attorney monday, obviously before jumping on it)...

You said you stopped paying after the purchase of car, 6 months, did you mean.. you bought the car, waited 6 months, then stopped paying and filed shortly there after.. or did you mean you bought it, then stopped paying, waited 6 months and filed?

I've heard that with the car at least it wont matter on waiting to stop? Not so sure on using cards for groceries a little (while still paying on them).

[Calthius]

No we stopped paying our credit cards 6 months before we purchased the van.

We filed 15 days after we purchased the van before we made our first payment.

[mm2009]

No we stopped paying our credit cards 6 months before we purchased the van.

We filed 15 days after we purchased the van before we made our first payment.

wow ok, how did you get a loan, with the stopped payment thing going on, wouldnt this trash the credit score? How did that work out..

Thanks

[Calthius]

Yeah my credit was trashed but we had a failed business. My credit score had been trashed long before I stopped paying. I explained that to the auto dealer and that we were going to be filing bankruptcy with in the next couple of weeks. The van that we had at the time was falling apart and we thought we would try and see if we could get into something better.

We had decided we were going to surrender the old van In the bankruptcy since we were about 4K upside down and it had 155K miles.

Turns out the lender that we were surrendering the van to doesn't want it. So now instead of 1 van we have 2. Things worked out pretty good for us.

[mm2009]

Yeah my credit was trashed but we had a failed business. My credit score had been trashed long before I stopped paying. I explained that to the auto dealer and that we were going to be filing bankruptcy with in the next couple of weeks. The van that we had at the time was falling apart and we thought we would try and see if we could get into something better.

We had decided we were going to surrender the old van In the bankruptcy since we were about 4K upside down and it had 155K miles.

Turns out the lender that we were surrendering the van to doesn't want it. So now instead of 1 van we have 2. Things worked out pretty good for us.

I'm in a pickle in terms of actually finding this new car.. if i want the right color/model/specs, it seems i may have to order and it may not come in for 2 months.. causes an issue i think, my credit union approved me for a good interest rate.. so i'm not sure, if once approved, if i can just go ahead and stop paying on my cards right away, or if i really should wait till the loan is signed at the dealership once the car is delivered.

And if they pull a lower credit score or give me issues, do i dare mention i'm about to file, to get a lower rate?

[jadams]

Credit unions do not like bankruptcy filings (not that anyone does, but CU's more so). So I would not try to use a future BK filing as a negotiating tactic. They take it far more personally than a bank or finance company.

I also fear you aren't fully comprehending your situation. You're putting day to day food expenses on your credit card because you're struggling, but you're looking at a new 2010 vehicle custom order because it's light years beyond even a *gasp* 2009?

Are you discharging sufficient monthly obligations to come out the other side with enough income to pay the new car payment plus daily expenses without the luxury of any credit cards?

If you're nuking large amounts of credit card payments perhaps there's enough free cash flow for everything to work out -- but are there better things to do with your free cash post-BK than the new car?

If you're going to go through with the purchase, I wouldn't stop paying your cards until the loan is funded and the vehicle properly titled. I've never seen a car loan funded prior to delivery -- and the CU can pull out prior to funding. Be careful about Spec/SPOT deliveries. Just because the dealer gave you the keys and you drove home doesn't mean the deal is completed.

Good luck.