Anyone want to give this scenario a try?

[azballer]

Ok, here is the dilemma:

My wife and I will be filing Ch 7 on 10/4 of this year. We currently own 4 vehicles. 2 of the vehicles were purchased at the end of June with low monthly payments. The other two vehicles have high payments and will be surrendered/repossessed. We stopped paying on one of them on 7/10 (nissan motor finance) and the other on 7/17 (Santander). Here is my question:

Should we surrender the vehicles before we file and deal with the deficiency balance in the BK or should we keep them and hope they are not repossessed before 10/4--about 75 days of no payments)? My thought is if we keep them (all 4 cars) until we file, we can use all four payments in the means test. We should pass either way, but an extra $1800 in deductions would be nice.

I guess the other question is if the cars are repossessed prior to filing, could we still claim the payments in the means test? The right thing to do would be to give them back right away and I hate paying insurance on 4 cars...but I would just hate to take any chances with the means test (too much income for median test).

Thanks in advance for any non-legal advice.

[keptdigging]

I should leave this for someone well versed in vehicle issues (which I am not) but can two people really claim 4 vehicles on the means test?

[azballer]

We do have a 2 year old son...

Anyway, I have read in some places that there is a limit of 2 cars, but others have shown people claiming 3.

Just trying to get everything right in our pre-BK time frame and my attorney is getting sick of my questions. LOL

[mrskal]

What state are you in? I dont know for sure, but I dont think you can have exemptions on 4 cars.

[biotechsolution]

you can have 1 vehicle per driver but you're still going to be limited by the irs standards for car payments. Anything over about 450 won't count for the means test.

[azballer]

We are in GA.

biotech--both of our new payments are well under $450, so that will not be an issue. Thanks for the reply!

[mrskal]

This is what it says on the means test online.

Select the number of vehicles for which you claim an ownership or lease expense. (You may not claim an ownership/lease expense for more than two vehicles.)

[azballer]

Thanks mrskal. I have a feeling that is what we are going to be stuck with.

With that in mind, does anyone know if there is an advantage to trying to keep the two vehicles until we file? Our options are to surrender now or keep them and surrender them after we file. I know the BK will take care of the obligation either way, so is there an advantage to one way over the other?

Thanks

[mrskal]

I am new to this as well, but I do not see any reason to keep the cars, I think that once they are past due by 60 days, they are going to repo them anyway. Plus, why keep paying insurance on them? Save that money.

I am not sure how you go about giving up the cars. Just take them to the dealer? I would call the finance company and ask them.

[tcreegan]

many cars on means test

Hello azballer,

The Dept. of Justice (home of the US trustee) says "normally one vehicle per taxpayer" is allowed for expense on the means test.

For Georgia the two vehicle expense allowed is $478 (except Atlanta at $468)

Surrender the vehicles = no more insurance expense
Just call the finance company, they will be happy to make arrangements.

List them on the "Statement of Financial Matters"

I would also list them on the creditors matrix and schedule D to make absolutely certain they could not come back with a deficiency judgement.

Hope this helps,

Tom in Colo