Is my car loan a problem with a Ch. 7?

[Dee]

I have 12 months left to pay on my 72-month car loan. My monthly payment is $783 and I'm current on payments. There is about $9,000 equity in it. We are filing in Middle District Florida but using Texas exemptions, since we moved less than 2 years ago, so the car is completely exempt under Tx exemptions.

Can the fact that my payment is over the IRS allowance and there is only one year left on the loan force us into a Ch. 13? Could we be required to accept a reaffirmation with a lower payment, but an extended loan term? I prefer to just continue making payments and get it paid off in a year.

I don't know if it makes a difference, but we are over the median by about $20k, only have $83 DMI on the Means Test, and are -$700 on our actual expenses (husband's unemployment check is the only thing getting us through at this point). Is there much likelihood that we would be put into a Ch. 13 under these circumstances?

[tcreegan]

Hello Dee,

You gotta love Texas, besides your car, don't forget you can exempt 2 horses, mules, or donkeys, 12 head of cattle; 60 head of other types of livestock; and 120 fowl....

Your car payment is $287 over the standard, so you end up in the UST audit range....but if you are -700 on Sched I & J it seems like you fall in the 'totality of circumstances' territory.
Need some of the forums other over-median filers to weigh-in here....

You can't be forced into a reaffirmation of any kind, the BK law is very clear; reaffirmations are strictly voluntary. Just keep making the payments.

Good luck with your filing,

Tom in Colo

[ccsjoe]

Hey Dee,

Over the median filer by 16K here as Tom requested. If you are truly -700 overall, the excess 300 should not cause a material difference and you should be ok. That being said, it will trigger the UST's attention as Tom mentioned, however hopefully it will trigger no more than a cursory review. Just the fact that we are over the median filers will trigger UST to take a look at us. In most cases this is cursory. In some cases the UST will file a POA to give itself more time to review your case if it appears complicated or unrealistic.

[tobee43]

Hello Dee,

You gotta love Texas, besides your car, don't forget you can exempt 2 horses, mules, or donkeys, 12 head of cattle; 60 head of other types of livestock; and 120 fowl....

Your car payment is $287 over the standard, so you end up in the UST audit range....but if you are -700 on Sched I & J it seems like you fall in the 'totality of circumstances' territory.
Need some of the forums other over-median filers to weigh-in here....

You can't be forced into a reaffirmation of any kind, the BK law is very clear; reaffirmations are strictly voluntary. Just keep making the payments.

Good luck with your filing,

Tom in Colo

thanks tom for reminding everyone... it was extremely difficult for us to give up our asses...we screamed fowl!!!!!...but that didn't' even help us in this state.

( I JUST couldn't resist...you put it right OUT there in front of me tom...what was i to do??)


your right...ya gotta love Texas!!!

[Dee]

Yep, definitely grateful that we can still use those Texas exemptions! My husband suggested painting our dogs to look like miniature horses and making them wear saddles, but somehow I don't think the court would go for it - especially since they each weigh less that 10 lbs each!

I'm very curious about the "totality of circumstances" issue. I tried reading about it online last night but the legalese jargon put me to sleep. The biggest thing I worry about is that we had a Ch. 7 discharged 8 years ago in Texas (yes, we really are that unlucky!). I would love to hear more from over the median filers, as well as any 2nd-timers.

Thanks, everyone! This board is the only thing keeping me sane at this point!

[ccsjoe]

Totality of circumstances means that your entire picture will be considered when determining whether you should be a 7 or pushed into a 13 or dismissed. It means no longer will a single test determine this. Even if you fail means test, your entire circumstances will be used to determine your eligibility for relief, such as ralistic future income, etc.

Can't help you with 2nd timer experience though.

[tobee43]

Yep, definitely grateful that we can still use those Texas exemptions! My husband suggested painting our dogs to look like miniature horses and making them wear saddles, but somehow I don't think they court would go for it - especially since they each weigh less that 10 lbs each!

I'm very curious about the "totality of circumstances" issue. I tried reading about it online last night but the legalese jargon put me to sleep. The biggest thing I worry about is that we had a Ch. 7 discharged 8 years ago in Texas (yes, we really are that unlucky!). I would love to hear more from over the median filers, as well as any 2nd-timers.

Thanks, everyone! This board is the only thing keeping me sane at this point!

i understand it's confusing!!!

"totality of circumstances" issue would be even for bravest of us to tackle and lose sleep over ...it's so confusing!!!...however the bottom line is:

totality of circumstances test is that it’s all about the facts of your case. and, to “pass” the test, you need to be able to justify the expenses you claim.

basically to try to break it down...

There are two “tests” that control your eligibility for Chapter 7 bankruptcy: (1) the means test, and (2) the “totality of circumstances” test.

these two tests apply when your debts are primarily “consumer debts.”

“consumer debts” are defined as those debts incurred for “personal, family, or household purposes.”

some states weigh the "totality of circumstances " test higher than other states....i have only seen examples of the totality of circumstances apply to criminal proceedings so i'm not certain exactly how texas views them towards a chapter 7 filing. it may come into play when there are substantial assets, etc.

i would think after your atty reviews your financial situation in it's totality...they you will have a clear perspective of your situation and how the courts may view it.

[justbroke]

I don't know how you're positive $83 on the Means Test and negative $-700 on Schedule J? (Unless you're not counting the unemployment income on Schedule J?) In any event, being over the median, having $83 on the Means Test (B22A) and having a car payment that is nearly $300 over the IRS National Allowance for a vehicle, might bring some interest from the United States Trustee (UST).

The problem is two fold. First, you're within a year of paying it off, and second, you have significant equity. That equity is going to be interesting to exempt (noting that I didn't look up Texas exemptions).

For those reasons, I'd make sure I had a very good attorney who was willing to fight for you. It's going to cost you more money, but I would "expect" a challenge from the UST.

Best of luck with you. You do need to take advantage of bankruptcy pre-planning and work with an attorney to

[tcreegan]

Hi all, Hi Justbroke,

Texas throws vehicles into the personal property exemption (along w/ the horses, cows, and chickens) of 30K, doubled for joint filers.

Get rid of some of the livestock and there is plenty of room for exempting vehicles.

I too was interested in how you can be +83 on the means and -700 on Sched I & J Maybe there is a chunk of income in the 6 month lookback that isn't there in the I & J 'look forward'

Tom in Colo

[Dee]

I don't know how you're positive $83 on the Means Test and negative $-700 on Schedule J? (Unless you're not counting the unemployment income on Schedule J?) In any event, being over the median, having $83 on the Means Test (B22A) and having a car payment that is nearly $300 over the IRS National Allowance for a vehicle, might bring some interest from the United States Trustee (UST).

The problem is two fold. First, you're within a year of paying it off, and second, you have significant equity. That equity is going to be interesting to exempt (noting that I didn't look up Texas exemptions).

For those reasons, I'd make sure I had a very good attorney who was willing to fight for you. It's going to cost you more money, but I would "expect" a challenge from the UST.

Best of luck with you. You do need to take advantage of bankruptcy pre-planning and work with an attorney to

You are correct - we did not use the unemployment on the Means Test, since we were told it is not considered income in our district. Also, the unemployment compensation comes from Texas, which we were told specifically prohibits unemployment from being factored into bk procedings. Not sure what we're going to do when it runs out - still trying to figure that one out.

Texas allows pretty much the best exemptions in the country, which is why we're so glad we can use them. It gives us up to $60k for personal property, including equity on one vehicle per licensed driver.

Our attorney does nothing but BK's - and a heck of a lot of them, so hopefully he will earn his retainer fee for us.