Can I borrow money for a car from relatives during my chapter 7?

[bluzyboy]

I recently filed chapter 7 and my 341 hearing is next week. My car has quit running and my sister has offered to loan me enough money to buy a used car. Is this OK or will the car be viewed as an asset and attached?

[AngelinaCat]

You should be okay, although you will be asked if anything has changed since you filed. You will have to say '"yes, my car died. My sister is helping me buy a used one." Depending on if you buy one before or after your 341, you may have to declare its value. If you can, you may wish to hold off buying one until after your 341. Do you have an attorney? These are excellent questions to ask him/her.

What was the value of your old one?

[keepmine]

Personal Property

18.345 - Motor vehicle to $2,150; clothing, jewelry, personal items to $1,800 total; household items, furniture, utensils, TVs and radios to $3,000 total; health aids; cash for sold exempt property; books, pictures & musical instruments to $600 total; food & fuel to last 60 days if debtor is householder; earned income tax credit; domestic animals & poultry with food to last 60 days to $1,000; lost earnings payments for debtor or someone debtor depended upon needed for support; personal injury recoveries to $10,000; $400 of any personal property that is not already covered under any other exemption.

Looks like Or. allows a $2150 vechicle exemption and you can add another $400 to it if you have unused personal exemptions.
If that the sort of proce range you have in mind, ask your lawyer about amending your schedules and adding your sister as a creditor. The bk code will allow you to repay her post bk.
Or, have her buy the car in her name and lend it too you until the bk is discharged and closed.

[tobee43]

i do agree with hub with the respect that i would just be truthful.....about the amount...also as keepmine has pointed out....you have an exemption for your auto....now apparently, your petition is already in the hands of the trustees office with an amount for the exemption.....so you may just have to make an adjustment....or like keep suggests try and wait until the discharge....or......have HER buy the car now and then after the discharge have her give it to you, if the car is your only mode of transportation.

[JackBondLove]

It seems to me that this is AFTER the filing, so anything she has now is past the date of the determination of the bankruptcy estate. Of course, it would be a good idea to mention it to the trustee, as well as have a letter from the person that details the terms of the loan (which in any case would not be part of the BK proceedings.)

This brings up an interesting question however. Let's say that on the date of filing a debtor had a car that was nominally worth $4K in a state that had an exemption of $1.5K for the car. And then, between the dates of filing and the 341, the car's engine blows up, making the car essentially worthless. Would the trustee demand that the debtor cough up either the $2.5K difference or the car with the engine fixed, or could the trustee revalue the car under the circumstances? Or any type of situation in which the asset has something happen to it that revalues it prior to the official liquidation (at which time the debtor officially gives up the asset of buys it back), or if it gets stolen, etc.

[tobee43]

It seems to me that this is AFTER the filing, so anything she has now is past the date of the determination of the bankruptcy estate. Of course, it would be a good idea to mention it to the trustee, as well as have a letter from the person that details the terms of the loan (which in any case would not be part of the BK proceedings.)

This brings up an interesting question however. Let's say that on the date of filing a debtor had a car that was nominally worth $4K in a state that had an exemption of $1.5K for the car. And then, between the dates of filing and the 341, the car's engine blows up, making the car essentially worthless. Would the trustee demand that the debtor cough up either the $2.5K difference or the car with the engine fixed, or could the trustee revalue the car under the circumstances? Or any type of situation in which the asset has something happen to it that revalues it prior to the official liquidation (at which time the debtor officially gives up the asset of buys it back), or if it gets stolen, etc.

indeed, it does bring up an interesting point as you have stated....

[frogger]

This brings up an interesting question however. Let's say that on the date of filing a debtor had a car that was nominally worth $4K in a state that had an exemption of $1.5K for the car. And then, between the dates of filing and the 341, the car's engine blows up, making the car essentially worthless. Would the trustee demand that the debtor cough up either the $2.5K difference or the car with the engine fixed, or could the trustee revalue the car under the circumstances? Or any type of situation in which the asset has something happen to it that revalues it prior to the official liquidation (at which time the debtor officially gives up the asset of buys it back), or if it gets stolen, etc.

BK is a snapshot of your financial situation on the day that you file. If your status changes that would be better for your creditors, between filing and the 341, then the trustee would be interested in that.

Otherwise, just remember that BK is a snapshot, not a motion picture...

[tobee43]

BK is a snapshot of your financial situation on the day that you file. If your status changes that would be better for your creditors, between filing and the 341, then the trustee would be interested in that.

Otherwise, just remember that BK is a snapshot, not a motion picture...

and i think that's the ONLY way it can be viewed, life changes daily ...so shoot...you'd be filing amendments daily...it is exactly like a snapshot.

[OhioFiler]

It seems to me that this is AFTER the filing, so anything she has now is past the date of the determination of the bankruptcy estate. Of course, it would be a good idea to mention it to the trustee, as well as have a letter from the person that details the terms of the loan (which in any case would not be part of the BK proceedings.)

This brings up an interesting question however. Let's say that on the date of filing a debtor had a car that was nominally worth $4K in a state that had an exemption of $1.5K for the car. And then, between the dates of filing and the 341, the car's engine blows up, making the car essentially worthless. Would the trustee demand that the debtor cough up either the $2.5K difference or the car with the engine fixed, or could the trustee revalue the car under the circumstances? Or any type of situation in which the asset has something happen to it that revalues it prior to the official liquidation (at which time the debtor officially gives up the asset of buys it back), or if it gets stolen, etc.

That $2.5K is an asset you owe the trustee.