Updates on progress towards Chapter 7 -- and questions/input requested?

[NoMoreCards]

As to your son, why didnt he obtain a car loan on his own using grandma as a co-signer - as well as his own insurance policy? I'm not quite understanding that entire scenario as our 20 y/o pays for her own car, insurance, apt, bills, etc and goes to school F/T while working a job on her off days / evenings / weekends.

I agree with the others - I believe the trustee is going to negate the car for your 22 y/o and you very well may end up in a Ch. 13 even if qualified for Ch. 7 from means test.

ETA: I dont believe your argument regarding the RAV will uphold - the trustee doesnt care if it's seats are torn, etc - the only thing he/she cares about is can it bring any $ to provide to the creditors. The answer is yes. We have a car that is in parts that we had to exempt for the trustee not to take it, so even a non-running car has value.

From other posts I've read, being pushed into a unwanted 13 is a concern. That might help explain things a bit better.

The car payment I expect is needed to keep the expenses up.

[sillywalks]

silly

the difference is that its your family who's trying to place a lien on a vehicle, thereby getting $442 a month. That is apples, oranges and spades apart from a lender holding the note and receiving payment. Its just the way trustee's look at it. What you should've done is discussed everything with a lawyer before you did it (assuming thats the route you're going) - if you're filing pro-se, you still should've at the very least met with a lawyer (free consult or paid) to discuss ramifications of what you were planning on doing.

As to your son, why didnt he obtain a car loan on his own using grandma as a co-signer - as well as his own insurance policy? I'm not quite understanding that entire scenario as our 20 y/o pays for her own car, insurance, apt, bills, etc and goes to school F/T while working a job on her off days / evenings / weekends.

I agree with the others - I believe the trustee is going to negate the car for your 22 y/o and you very well may end up in a Ch. 13 even if qualified for Ch. 7 from means test.

ETA: I dont believe your argument regarding the RAV will uphold - the trustee doesnt care if it's seats are torn, etc - the only thing he/she cares about is can it bring any $ to provide to the creditors. The answer is yes. We have a car that is in parts that we had to exempt for the trustee not to take it, so even a non-running car has value.

I appreciate your input, Pandora. I did not consult with a lawyer, mostly because I do not have one yet and my son needed a car he would be able to use to drive to school and work. As to why he did not get one on his own -- one, his insurance on his own would cost him over $4500 a year! He works over 32 hours a week, but is only making $7 a hour. You say that you don't understand my situation because your situation with your daughter is different. That is true, every situation IS different. I am amazed that your daughter can afford to pay for everything on her own! Is she using school loans to supplement her income to cover everything? I know my son is doing the best he can -- for instance, today he is in class from 8-1, then works from 2-8. He works every chance he gets (except Sunday's, when it is closed).

Regarding the RAV, I did not state the cosmetic issues as a reason why the trustee would not want the car, only to show why I used the KBB "poor/fair" value, rather than the "good" or "excellent" value. Was your non-running car a classic car, or just your average, run-of-the-mill car? How much of your exemption did you end up using for it? I'm not sure what parts they could get off of the RAV (all the parts are 200K miles old, except for the radiator and the driver door, which had to be replaced). I'm sure they could give it some value, but I would guess under $1000?

Can you help me understand how the Subaru could push me into a Chapter 13? Even without the car payment I am several hundred in the negative on the full means-test calculation (the long form). Probably more than that, now that my renter is leaving the basement. I could understand it might make me an asset case -- although I'm still not sure about that because of the lien on the car, even if it is family it still means I do not 'own' the car outright, right?

It seems at this point the best thing to do is to put the Subaru in my mom and son's name, or to find some type of finance company who will loan me the money to buy the car and repay my mom the $15K -- would that work?

Ugh. I hate this whole thing! I am NOT trying to cheat anyone here (though some of the responses make it seem that others perceive me that way). I am just trying to get by and be sure my son and I have safe transportation.

What I am also hearing is that, fair or not, the trustee is going to have problems with my mom providing financing for a car. Is that true regardless? Is there no argument in response that would help in this situation? Because frankly, I'm feeling a little screwed and overwhelmed at this point. Anyone have any helpful suggestions? Please?

[sillywalks]

From other posts I've read, being pushed into a unwanted 13 is a concern. That might help explain things a bit better.

The car payment I expect is needed to keep the expenses up.

Actually, I don't need the car payment to keep my expenses up -- in fact, with my renter leaving, I will be probably well into the negative.

[Pandora]

morning silly

Oh, trust me, I understand where you're coming from when it comes to kids, college and wanting to provide for them, and I dont believe anyone is saying you're trying to "get around" anything. I believe the concern is how the trustee will view things.

As to our daughter - yes she provides for 100% of her expenses and no, she doesnt use student loans to pay for anything other than college related items (tuition, books, etc). She has roommates (not on campus) and as to whether or not she can "afford" her chosen lifestyle remains a contention between us and her. :/ We help when/if she needs something she cannot afford (like a car repair or another necessity) otherwise she has chosen to do her own thing. She is learning very quickly that money doesnt grow on trees and to live independently requires sacrifice and copious amounts control. Its not always easy for her however when we get the phone call of "yeah went to this concert / spent this on XXX / drove friends around since they have no vehicle but I have no money for (insert whatever here)" then we tune it out and tell her "Sorry you want XXX, perhaps you need to give your budget another look so you can get XXX. Maybe tell those friends that you run around to help pay for gas, $5 wont kill them - or tell them to take a taxi/bus next time." She ususally quiets down - doesnt mean she likes to hear it but....its the way her father and I were raised and the way both our children have been raised. Is it for everyone? No...its not - and I dont fault anyone for paying for their kids until they graduate college, different strokes / different folks .

As to our non-running car, average run of the mill / classic - well...depends on who you talk to LOL! It's a 69 Charger however as previously stated, its not driveable currently and was classified as a parts-car even though everything is intact it does start, and all parts to repair it are here from top to bottom, inside and out. Value was placed as $1500 I believe, based off of county property records as well as KBB. I think your RAV is going to have to be valued at KBB / Edmunds, but you should average the 2 values to come up with a truer number, also look online for items in similar condition to yours and use that as well. The lower the better, but again it all really depends on what your trustee uses as valuation.

The Subaru: As I dont know your expenses vs. income, I was basing a scenario of a Ch. 13 due to your being over median as well as mom giving you the $15K to purchase the car outright - you will have to exempt it as you now have instant equity. The other issue is that you must be able to exempt the equity in all 3 vehicles you currently own by using other exemption allowance areas. If you cannot exempt them fully you will have to 1. buy them back from the trustee via payment plan (if allowed) or immediate payment; 2. turn them over to the trustee for sale in which you will get the allowed exemption amount returned to you upon sale, or 3. convert to Ch. 13 in order to keep them through the same methods above to keep them. Either way you need to have (according to your values) $22K to exempt the vehicles through your auto exemption allowances and any other you're alloted.

The next concern is that even if your mom gets a lien to the vehicle, the trustee may view it as preferential - your mother could easily say 'yes she owes me therefore I'm entitled to $442 monthly or I'll repo the car', however your mom could just as easily turn around, give you the $442 every month or if denied by the trustee - repo the car but give it to you anyway. See where the areas of concern are? Think like a trustee...they're working for the creditors to get as much money as possible.

Regarding your income to expense ratio - you need to ensure what counts as income, i.e., your son works and has income so it may be counted as well as the rent/future rent. Does your renters income count - is he/she considered in household size? Cant claim certain things for vehicles owned outright, etc etc etc. We're basing all of this off of what you claim is negative DMI into the hundreds however the fact of the matter is it all boils down to what your trustee determines is "reasonable expenses" in your area as well as what IRS standards are. If you're over median but neg DMI, I believe you can only use the IRS standards on several items.

Bottom line in everything is what someone else thinks / writes to the trustee is just an opinion of what they perceive, which in turn means that the trustee also can formulate his/her own opinion/value on the very same thing and come up with something completely different.

All of these things should be discussed with a lawyer who knows your entire story - especially since your mom gave you $125K to purchase your home yet no lien was recorded. You've got too many variables to try to work this yourself IMO.

[sillywalks]

Hey Pandora. I am, of course, concerned how the trustee will look at things, too. It's just frustrating, because what would seem 'reasonable' to most does not seem to fall into the 'reasonable' category with the trustee!

At this point, mom has not 'given' me the $15K - she loaned it to me with the agreement I will pay it back as I said. There has to be a way to make that loan show as being legitimate to the trustee, doesn't there? That is the frustrating thing -- it IS legitimate, I really did BORROW the money -- so the Subaru does not have $15K in equity, so how can the trustee say it does? If mom is listed as a lien holder on the title, they cannot simply take the car, can they? Because then I would owe the $15K and NOT have the car to drive! Isn't the law more concrete -- does the trustee not have to decide based on what is (i.e. the perfected lien) vs. what 'could be' -- or are they allowed the latitude to make 'what if' assumptions? I mean, technically, couldn't any lender do the same as the scenarios you mentioned? (not that they would! But, she wouldn't either!)

Regarding income -- my son does have income, but does not contribute to any household expenses while he is in school. He does well to pay his rent, food, and gas! I cover his health and car insurance, plus help with gas, food, and medical expenses as needed. Thankfully, he's pretty healthy, except for needing about $1000 in dental work soon.

I have not included the renter in household size, but I did include their rent in my income (less expenses). The info below is my new numbers, without the renter's payment.

Income -- 4644
-- Annualized current income = $55,728 -- median for household size of 2 is $51,184.
-- I use standards for health care, food, clothes, mortgage, and non-mortgage expenses = 1,088
-- Housing and utilities adjustment ($449 mortgage, $200 utilities - which is low -, $17 HOA, $250 HVAC/lawn/maintenance/repair, $60 pest, $140 phone, $40 garbage) minus allowed non mortgage expenses = $725 line 21
-- Transportation (2 cars): Operation = 478, ownership=$400 for both vehicles (this is NOT including the payment on Subaru)
-- taxes: $401
-- Deductions: $257
-- life insurance: $50
-- job education req.: $50
-- health care: $365 (Rx, dr. copays, chiropractor, dentist, eye doctor, etc.)
-- other: $24 internet
Total expenses allowed: $3838

Health insurance: $435
Contributions to family members: $250
Charitable contributions: $75
Total = $760
Debt payment (house) = $1395
All deductions allowed: $5993
line 18 = 4644
line 47 = 5993
Monthly disposable income = -$1349
60 month disposable income = -$80,940

Those are my numbers -- do you see any problems? That is without the car payment, and without the renter's payment. One of my questions is if I do not re-rent the basement, is the trustee going to question things? Even if I do re-rent at $750 (which I would like to do), I should still be at -$749 (taking $150 out for expenses of renting).

Any suggestions? My thought at this point is to just have mom and son on title, let mom or son carry insurance and make the insurance payments. Or, get some 'bad credit' financing at some hideous rate and repay my mom, thereby having the car with an 'acceptable' finance company.

Thanks!

[keepmine]

I'm gong to strongly suggest you get yourself to an attorney before you do anymore thrashing around and then ask for advise after the fact. For darn sure I wouldn't take out a loan and then repay an insider $15K and then file bk.
You really need to do a search using the term UCC-1. If it isn't properly filed, the contract and lein your mother has on the car is worthless. The trustee can just take the car and sell it for the benefit of your creditors.
We've had it happen to a few members and one of the mods {Minnymouth} lost her manufactured home when her lender didn't perfect their lein.

[sillywalks]

Keepmine --

Doesn't a UCC-1 only apply when a debtor is delinquent with regard to the creditor's specific debt and agreement with the debtor? In other words, it is not something my mom would file unless I was not paying her as agreed? Or would she file it when I file for bankruptcy?

Since at this point the title has not been registered -- am I better off letting her register the car and loan it to my son to drive?

[keepmine]

Keepmine --

Doesn't a UCC-1 only apply when a debtor is delinquent with regard to the creditor's specific debt and agreement with the debtor? In other words, it is not something my mom would file unless I was not paying her as agreed? Or would she file it when I file for bankruptcy?

Since at this point the title has not been registered -- am I better off letting her register the car and loan it to my son to drive?

I just don't understand why this is so hard.
You have no idea what you're doing. You are just floundering around with no clue as to how this process works.
With all the variables you've posted, you don't have a routine run of the mill bk. You had better get yourself an attorney before you make any other move that'll come back to haunt you.

[sillywalks]

keepmine -- I am going to speak with an attorney, but I cannot for the next 2 1/2 weeks, so I'm trying to figure out some game plan (if I can) before then.

I don't see any reason I cannot step out of the car situation. Have my mom and son sign the title as owners. Get my son insurance in his name (I think I have found a less expensive way to do this -- not as low as I pay for his, but not too much more). Then the car is in their names (not mine), he drives and insures the car, and I help to pay the insurance as I do now. At this point, the car is not in anyway mine or in my name. The money did pass through my account, but that is easy to defend because my mom did not have his account number, and I can show it was withdrawn and the bill of sale showing he purchased the car with the money.

I'm just trying to figure out how to clean up the mess without making it a bigger deal (the UCC-1 and such). I don't see how the above scenario can hurt me, but it anyone else does, please let me know. The title needs to be filed within 30 days, and if I cannot get an appointment with an attorney during my spring break, I won't be able to see one until late May.

Plus, I have had the poo scared out of me, and I want to find a solution so I don't feel so unsettled and anxious for the next 2-8 weeks! If I at least have what seems to be a workable plan to go to the lawyer with, I will feel better. This stuff is scary, and I truly did not believe that having my mom loan me the money was going to be a huge problem. I was kind of blindsided by it, I guess. So, I'm a little freaked out and looking for some type of solid ground.

[sillywalks]

Sillywalk,

Your mother had better properly perfect the lein within the time allowed by law or the trustee may well snatch that ride.
The majority of states use the UCC and require a UCC-1 be filed within 20 days of purchase to perfect the lein. Some states have there on procedures so you need to ask a lawyer in your state exactly where you stand on this issue.
I really think a trustee is going to have an issue with you financing a $15K car for your son and then paying $442/month to your mother while you were on the cusp of bk.
Your best bet was to let your mother finance the car in her name and let her grandson use it. Post bk, you could have begun repaying the loan.

Keepmine --

This is what I am saying in my last post (at the end of the thread) -- that basically my mom provided the money for my son to buy a car. The car could be titled in his and her name. He could get his own insurance (hopefully) or be covered under her policy. The 'loan' will be left in limbo until after the bankruptcy is filed, when I can make the monthly payments to her as agreed (but not included in the bankruptcy). As far as the court is concerned, the Subaru would have no bearing on my case -- no payments, no debt taken on by me. After the bankruptcy, I would just make the payments to my mom without the lien and/or complications. That is what you are suggesting in what you posted above, right?

[Pandora]

.... It's just frustrating, because what would seem 'reasonable' to most does not seem to fall into the 'reasonable' category with the trustee!

At this point, mom has not 'given' me the $15K - she loaned it to me with the agreement I will pay it back as I said. There has to be a way to make that loan show as being legitimate to the trustee, doesn't there? That is the frustrating thing -- it IS legitimate, I really did BORROW the money -- so the Subaru does not have $15K in equity, so how can the trustee say it does? If mom is listed as a lien holder on the title, they cannot simply take the car, can they?


Regarding income -- my son does have income, but does not contribute to any household expenses while he is in school. He does well to pay his rent, food, and gas! I cover his health and car insurance, plus help with gas, food, and medical expenses as needed. Thankfully, he's pretty healthy, except for needing about $1000 in dental work soon.


Any suggestions? ...

Thanks!

Silly,

As to your questions / concerns (in order)

No one said trustee's were reasonable when it comes to debtors discharging thousands of debt. Again, what you may deem as reasonable, fair and just does not constitute the trustee agreeing with you unfortunately.

The 15K: while you may have borrowed the money from her - essentially it is for your son's benefit, therefore your son should work something out with his grandmother to repay the loan. Legitimacy resides in the law, and you did not purchase this car for YOUR benefit or usage like most people who purchase a car prior to filing BK do. From what I understand you are claiming auto expenses for 2 vehicles....assume it doesnt include the new car, however are you certain you get expenses for autos you own? We dont get anything other than operating expenses (ie., gas, maintenance)

Your son doesnt live with you, he has a job, pays his own rent, etc - and while you can contribute some towards assisting him, you are essentially trying to write off an entire payment done for his benefit in order to bring your DMI lower. Or at least..thats how it reads when reviewing your posts.

As to any suggestions - yes, as myself and others have stated you really need to consult with reputable legal counsel before you get into a position that you cannot get out of.

With all that being said, if you actually do plan on hiring an attorney to file then you're doing all of this essentially for nothing because thats what you hire legal representation to do on your behalf. They will tell you what your options are based on what is set forth before them, its their job. It really does sound like you're trying to plan all of this yourself and file pro-se, which in your case would be a huge mistake given everything you've done thus far to this point.

[Pandora]

silly

have you read Des' thread on collecting rents after filing CH. 7? If not, you should.

http://www.bkforum.com/showthread.php?68110-Collecting-Rents-After-Filing-A-Chapter-7-A-Must-Read

[sillywalks]

Silly,

As to your questions / concerns (in order)

No one said trustee's were reasonable when it comes to debtors discharging thousands of debt. Again, what you may deem as reasonable, fair and just does not constitute the trustee agreeing with you unfortunately.

The 15K: while you may have borrowed the money from her - essentially it is for your son's benefit, therefore your son should work something out with his grandmother to repay the loan. Legitimacy resides in the law, and you did not purchase this car for YOUR benefit or usage like most people who purchase a car prior to filing BK do.

Your son doesnt live with you, he has a job, pays his own rent, etc - and while you can contribute some towards assisting him, you are essentially trying to write off an entire payment done for his benefit in order to bring your DMI lower. Or at least..thats how it reads when reviewing your posts.

As to any suggestions - yes, as myself and others have stated you really need to consult with reputable legal counsel before you get into a position that you cannot get out of.

With all that being said, if you actually do plan on hiring an attorney to file then you're doing all of this essentially for nothing because thats what you hire legal representation to do on your behalf. They will tell you what your options are based on what is set forth before them, its their job. It really does sound like you're trying to plan all of this yourself and file pro-se, which in your case would be a huge mistake given everything you've done thus far to this point.

Pandora --

Hopefully you can see from the numbers I posted that I am not overly concerned with my DMI -- I'm well in the negative without the car payment. My son is a college student who lived with me until January -- he is still legally considered part of my household. As my dependent, I do feel responsible for helping him secure reliable transportation, something that will get him through school, and possibly graduate school. As his mom, I borrowed the money to have another car -- it just happens that he will be driving that car. If I could have found a different car that was as good of a deal, I would have gotten that car and let him drive my 2001 Camry. It just happens that this car was a great deal and much more to his taste, and his car died before mine did. If mine had died first, I would have leaned more towards a vehicle that would be more useful for me. Actually, my plan was to get a car for myself, with my mom signing for financing for me and my paying the finance company. When my son's car went dead, I thought (for a moment) about getting him a less reliable ride and a newer car for me -- then realized it would make more sense to just get a reliable ride for him and to put another $1000 or so into my car to be sure it is able to run for a while longer. I thought that ultimately it would be wiser financially to do it this way, because the vehicles I was looking at would have cost $20-25K from what I researched. Obviously, at some part in the whole time-consuming, frustrating process of finding a car, the consideration that my mom providing the financing herself would be a problem did not cross my awareness. At the time (being unable to get financing on my own), it seemed a godsend.

As to filing pro-se, I would prefer to do that, honestly. My plan has always been to consult with an attorney, hopefully with as much of the paperwork done as possible so that I could keep my time with him/her very short. Basically, hand them my completed paperwork and have them review it and help me make any corrections needed, then go to court on my own. If, of course, the attorney says I really need them fully involved, I would do that - but I'd rather save the money, ironic as that may seem.

[sillywalks]

silly

have you read Des' thread on collecting rents after filing CH. 7? If not, you should.

http://www.bkforum.com/showthread.ph...-7-A-Must-Read

Thanks for the link, Pandora. I looked at it. I'm not sure exactly how it will apply to my situation. I was/am for another few weeks renting out the basement of my primary residence, which I intend to pay and stay through (I think that's right). I am current on the mortgage. I don't believe there is any equity in the house, though I plan on having it appraised soon just to have actual figures on paper for the court. I don't know if what is discussed in the link will apply, since it seems mostly to deal with rental property or property given up in bankruptcy.

[Pandora]

I dont believe an attorney will review paperwork you hand them - ask them questions - then you go file it pro-se unless you have a friend who's an attorney experienced in Ch 7 & 13 Bk. Generally you consult with an attorney (free or paid), run quick numbers (i.e., yearly income to quick means test based on that #), give a generalized figure of debts owed, asset values, and then you get a ballpark best "guesstimate" of either Ch. 7 or 13. You dont get to the actual paperwork (schedules, etc) until after you've hired your attorney, at which that point you fill it all out and then they'll go over it. Corrections will be made accordingly prior to filing.

Or at least thats how its worked for us...

I think the bigger picture that is being looked at is that one moment you're stating things are loans and are to be paid inside of your BK, then you're turning it around in the next sentence (sorry... ) same goes for your renter - either you are the landlord and are collecting rents or they are a roommate, splitting the bills/expenses equallly, but you cant keep switching it up to suit the situation or issue that someone else questions or may see an issue with. Thats why I included Des's link on collecting rent and while it does pertain to rental properties, you either have a lease agreement with your renter that states $650 per month for XX months - OR - they are your roommate and things will be counted differently. A whole 'nuther issue in itself.

I cant speak for anyone else on here - only myself - and in trying to help you possibly see areas where a trustee or even a lawyer would have issue. I'm not a lawyer, I'm not even a paralegal - hell I'm just a SAHM who hates to see people get themselves in a position they may not be able to get out of. Life is hard enough as it is without adding additional stress to it.

I have no other suggestions for ya Silly - I hope it all works out the way you want it to hun. Keeping my fingers crossed for you.