Chapter 7 Auto Equity

[bendgetaway]

Re: Chapter 7

I have a 2008 auto that I had appraised, as it has equity. It appears that I will have around 10,000.00 and I've been told that the BK court will most likely take to pay off debts. I have someone who will buy it and then I could use the money to purchase another and stay within my auto allowance. My question is if I wait 90 days to file, will the BK court look at my credit report, as it will then show it was recently paid off and question what I did.

[BobMango]

Well first off, what state are you in? That will tell you if your state allows exemptions for autos and how much. If you can use federal exemptions you may be able to protect that much equity by applying unused homestead exemptions to your car.

It's not a matter of the court looking at your credit report, it's what you have to tell them. They will ask about any assets you had in the last two years that you no longer have. If you sell that car for fair market and use the proceeds on allowable expenses, (i.e. not a vacation to Maui or new diamond earrings) you should not have a problem.

[bendgetaway]

I'm in Oregon. I think that I will need to use my homestead exemption for my parents home. I'm in a unique situation, as my personal residence is not upside down, but I'm letting it go to save my parents home and because I have an ex that won't get off title, unless I go through a costly lawsuit. Fun, fun & more fun!

[BobMango]

It's always something isn't it?

In Oregon you can't use federal exemptions so it looks like you can only protect $2150 on your motor vehicle. You could also throw in the $400 wildcard I
suppose but that will still leave you quite a bit shy of your total equity.

Your best bet is to sell the car, and make sure you get fair market. I'd avoid selling to a friend or relative as that will raise a flag for the trustee to take a closer look at the transaction. There is nothing wrong with selling assets to get by before filing. As I said before, just make sure you convert the money to something that you can exempt or use if for reasonable living expenses.
Don't pay any unsecured debts since that will be viewed as a preferential payment and cause more issues.

Not sure what you mean about using your homestead to protect your parents house. Are you all filing as a single household, or are you on the title of their house?