Now I'm really confused!

[wabbit]

I have been to see 3 lawyers so far, all of them telling me different things. My situation in a nutshell:

Owe 130,000 on my home which includes 2nd mortgage of 8,500.
Owe almost 15,000 on AMEX.
Income is about 3,000 a month, 2,000 of it being Social Security benefits for my daughter and I. I have a part time job that covers my health insurance with not much left over, and my bf pays about 500 a month to cover household expenses. My SSI will soon be on a debit card that will be paid directly from Social Security.
Own my car free and clear, worth about 7,500 in a private sale according to Kelly Blue Book.
I need to be able to have a car so I don't really want to lose my car.
I do not want to keep my house and I will have a place to live besides.

First lawyer says not to worry, can take the car to auctioneer and get a lower value and pay the difference from my 2,500 exemption. Don't worry about SSI as it is exempt.

Second lawyer says I will have to pay full value of difference on the car, so 5,000. Also says I really need to do a short sale on my house because I don't want foreclosure. I got the feeling he has some buddies that all benefit from the bankruptcies and short sales lol Also not to worry about SSI.

Third lawyer today says I will also have to pay 5,000 for the car. And that no, my SSI is not exempt as once the benefits are paid out they are just considered cash on hand. This is wrong, isn't it?! I'm starting to get really confused!

As I see it I have these options.

#1 File ch. 7, pay the difference for my car somehow no matter how much it is and still be better off with all of the debt wiped out.

#2 File ch.13 and not worry about keeping my car and pay off whatever the payment ends up to be. Though I'm a little worried that I would still be in the same boat of not having enough money to make ends meet.

#3 Try and modify my home loan so that I can sell and pay off both mortgages, and somehow settle my debt with the credit card company. Not sure that one is even realistic.

I'm also wondering if this would be doable or considered fraud...could I trade in my car and buy a newer one that would give me a small amount to pay off, say a few thousand, and then file for ch.7? Reaffirming the car loan? I'm not planning to file for about 6 months probably.

And one last question lol Can I save the money from SSI on said debit card and not have to worry about anyone being able to take it, or have any issues with filing bk?

Any input is greatly appreciated, I know this is long winded

[rjmwx81]

I'm also wondering if this would be doable or considered fraud...could I trade in my car and buy a newer one that would give me a small amount to pay off, say a few thousand, and then file for ch.7? Reaffirming the car loan? I'm not planning to file for about 6 months probably.

How old is the current car, and what kind of shape is it in? A trustee will not likely have a problem with you buying something more reliable, as long as it's not a luxury car.

[wabbit]

It is an '05 Toyota Corolla and it is in pretty good shape, 87000 miles. So I wouldn't be getting anything more reliable I guess?

[BKDebby]

Could you afford a new car payment after BK? I bought a new 2010 Toyota 3 months before I filed. So I don't have to worry about equity, and I plan on reaffirming it.

[rjmwx81]

It is an '05 Toyota Corolla and it is in pretty good shape, 87000 miles. So I wouldn't be getting anything more reliable I guess?

Well, even an '05 would be almost 6 years old now, and even good ol' reliable Toyotas start needing significant maintenance as you get close to 100,000 miles. So if you can afford a new car payment, the trustee's not too likely to give you a hard time.

[wabbit]

I think I can afford a small car payment, like under 200. I'm sure my credit is not tanked as of today, but I haven't paid my mortgage this month and tomorrow is the late day. I guess I'm wondering if anyone would even really give me a loan!

[BKDebby]

Wabbit, when I bought my Toyota back in June, I wasn't late on anything yet (it was close though). All the Toyota dealer cared about was my credit score, they told me they ran it through TransUnion and it was 780 then. I was approved for 0% APR through Toyota Financial. When I filled out the credit app, I fibbed and put down way more income than I actually make. I don't think that really mattered but I wanted to bump it up higher due to all my credit card debt.

When I signed all the loan paperwork, I had to sign a paper that said I would NOT file bankruptcy within 10 days or the deal was off. I have financed many cars over the years and I've never had to sign a paper like that. It was through Toyota Financial and from what I read here, they make you reaffirm your debt with them, you can't do a ride-through. Although I was planning on reaffirming that debt anyway.

[despritfreya]

In response:

1. $$ traceable to Social Security is exempt, exempt, exempt. It appears that your benefits are in a segregated account therefore tracing is not an issue. Do not add anything to the account that is not SS. Further ALL Social Security funds sitting in a bank account or on that debit card are exempt but the account must be listed in Schedule B with the proper exemption stated on Schedule C. I have a client right now that had over 7K sitting in a designated SS account when the 7 was filed. Trustee wanted evidence that the funds were from SS. I sent the info over yesterday and I do not expect any other inquiry from the Trustee.

2. If you are filing a bk and have no intention on trying to keep the home, attempting a short sale is a waste of time. The only one who benefits (assuming you can get the lender to agree to it. . . good luck) is the realtor who makes a commission.

3. There is nothing wrong with trading in the vehicle to get a newer/more reliable one (with the added benefit of reducing the equity in the newer auto). The transfer is disclosed on the Statement of Financial Affairs, the new auto is listed on Schedule B and the lender on Schedule D, and your Statement of Intentions will show that you are reaffirming. Lastly the vehicle payment is referenced on Schedule J.

4. If you keep your current vehicle and you file a 7 you will have to deal with the non-exempt value issue. Some trustees will allow you to simply cash them out for the difference others will require that the vehicle be put up for public sale and you are free to bid at that sale. Since you are not dealing with “major” dollars, this may be doable for you.

Based upon the info you supplied, I would be telling the potential client that, if qualified, a 7 makes more sense than being in a 3+ year 13. I would leave the auto issue up to the potential client. In the end it is the client who makes the final decision as to which chapter best suits them after weighing all of the options. Remember, the attny makes more $$ off of the client if the client chooses a 13 therefore, the attny has a vested interest in pushing the 13, but it is the client’s choice that matters.

Des.

[AngelinaCatHub]

In response:



4. If you keep your current vehicle and you file a 7 you will have to deal with the non-exempt value issue. Some trustees will allow you to simply cash them out for the difference others will require that the vehicle be put up for public sale and you are free to bid at that sale. Since you are not dealing with “major” dollars, this may be doable for you.


Des.

Des, she may just be better off to have it sold at auction. In FL it is my understanding that she has a vested interest in at least her exemption (FL 1k). She could bid for the rest and if it DOES NOT SELL to any other, besides expenses, it would be hers free and clear. If she bids at all, except for her exemption, she would have to have cash in hand (in FL). 'Hub

[wabbit]

Thank you all for the advice. My mortgage payment is officially late today, first one ever. I decided it was now or never and I didn't want to roll the dice on my car when it came down to filing. So, I went today and wouldn't you know it I qualified for a new car. It made more sense to me to have a new car rather than keep going with the older one and have to worry about the possible maintenance issues as brought up.

I appreciate all of the help!