Complicated Car Loan situation prior to CH7 filing

[IBroke]

Hi,

I'm currently holding a joint car-loan of a 10 year old car together with my mother. I want to file CH7 - my mother doesn't want to file BK (yet).

Here's my plan:

My mother is expecting a settlement these weeks and could pay off the remaining balance in one amount ($3,400) prior to my BK-filing. The car loan is about 2 years old with 1 year of payments remaining. By paying off the car (we want to keep it), the loan would not receive the "IIB"-notation on the credit report which is crucial for me and my mother. The "asset" that would be created by owning the car when filing is not an issue either due to its low value (2000 Mercury Sable with 118K miles on it) and the fact that I don't have any other assets of value either.

Are there any issues I overlooked? I have an appointment with an attorney a week from now but I'm curious what to expect. Since I have no assets or income, the car would be the only "issue" I would be dealing with in this case. Would this payment be considered a "preference" of one creditor over the other one (this is the only secured debt I have) ALTHOUGH my mother would make the payment (she is co-signer) and I would have the right to pay off the car during BK anyway?

Thanks in advance!

[keptdigging]

I think you've thought this through (assuming your numbers are right on value and exemptions.) The only wrinkle you haven't mentioned that I can see is that your mom paying off your car loan might be considered a gift to you, and thus income on the means test. Certainly not a preferential payment since it's her money not yours.

Now it might be cleaner for your mom to pay it off after you file--that's what attorneys are for.

In fact not only is it not preferential--as a co-signer your mom HAS to pay, and your bk has no effect on her obligation.

[IBroke]

I think you've thought this through (assuming your numbers are right on value and exemptions.) The only wrinkle you haven't mentioned that I can see is that your mom paying off your car loan might be considered a gift to you, and thus income on the means test. Certainly not a preferential payment since it's her money not yours.

Now it might be cleaner for your mom to pay it off after you file--that's what attorneys are for.

In fact not only is it not preferential--as a co-signer your mom HAS to pay, and your bk has no effect on her obligation.

Thanks!

The reason why we want to take care of this car prior to the BK is that we want to avoid the "included in Bankruptcy"-notation on the account. I want to keep my car payment-history clean.

If it would be considered income, I should still pass the means-test because I'm unemployed and have no other income at all.