Is an Asset case that bad?

[Cavedog]

Florida middle district ch 7 filer in August for those that dont know me.

After going over all my schedules, forms, etc., looks like we may be over the exemption limit by a few thousand. I got some good ideas about spending down our cash on necessary items (new car battery today. Thanks Toyota for making a 84 month battery go bad in only 36 months!). The crux we are facing is that our second vehicle has probably between 4K and 6K worth of equity, and we can only exempt 1K of it. If it wasnt for this, we would be comfortable beneath our exemption limit and could keep some cash as well. Heck, we would even save about $350 a month!

If we keep the car. we will be an asset case. If we ditch the car, we wont be. We do not have an immediate need for a 2nd vehicle. Is an asset case that big of a deal?

Details on 2nd car if interested..
08 Toyota Sienna. Owe about $12K. Worth around $17,500 or so. Purchased April 2010.

[daylate]

Do you mind losing the equity in your car? If not asset case is probably no big deal. However, if it were me, I'd sell the car and spend the cash on necessities before filing. Either way you don't have a car but my way you have 4k worth of stuff or services.

[AngelinaCat]

We had to buy back our non-exempt items from the estate. Although the trustee gave us a discounted figure, we still had to pay $450.00 a month for 12 months for our stuff. Our stuff consisted mostly of family heirlooms and that type of thing. Although we valued everything at 'yard sale' prices, we were still over. So if you can do something about the second vehicle, I say go for it.

[Cavedog]

AngelinaCat,

Let's say we plan on reaffirming both vehicles and we come up with a DMI of $50. Then after the 341 meeting we change our mind and we don't reaffirm the one vehicle. Our DMI now goes to $400 with the savings in the car payment, gas, insurance, upkeep, etc being gone. Would we now be forced into a Ch 13 post 341 meeting?

The same goes the opposite way. We plan on not reaffirming and our DMI is $50. Then we decide at the 341 to affirm the loan. Our DMI goes to negative $350, so now we can't afford the car by our schedules.

I guess there is a third scenario. We reaffirm both cars and have a dmi of $50. Because of the extra equity in the car, the trustee has us pay $300 a month for 6 months. If I add that expense to my schedule J, now my DMI is negative 350, so on paper we cant afford to do that.

I can play with the DMI numbers now (keep cable or cancel it, pay for pest control or cancel it) where I have about $400 a month of wiggle room, but once I submit my schedule J really don't want to have to change everything around at the last minute. Or am I worrying too much?

THANKS BUNCHES!! Silly Florida and their 1K exemption!

[Cavedog]

Daylate, thats the way I am leaning..just get rid of the 2nd car..free up exemption amount..buy cheaper car 12 months down the road if need be.

[frogger]

An chapter 7 asset case is not bad at all. Any assets that can't be exempted are either forfeited to the trustee or purchased back at (normally) a great price.

Sure beats a chapter 13........

[daylate]

Cavedog- I'm not sure your scenarios work the way you suggest-if you have a car with 4-5k of equity i think the trustee takes whether you reaffirm or not and I'm guessing then they will look at whatever expense you have for your car and ask if you are going to buy a new one with about the same payment, If not you then have a DMI problem. Best scenario appears to be sell, spend it, buy new car with little or no down.

Or as frogger suggests maybe you can buy back the equity at a discount.

[SunshineGal]

Cavedog,

How did you arrive at the value? Having both hired my own certified appraiser for the vehicles, and then got hit with an in-home personal property appraiser coompliments of the trustee, I would have to say it is well worth the money to hire a certified appraiser to come out and value your stuff. That way you at least know what you are dealing with. By the way, I never saw my personal property appraisal which means his values were lower than mine. Look up the blog entry by Alper regarding "trustees offer tips for valuing property", this will also help you spend down some of that money.

[tobee43]

SG...what excellent advise. also, as AngelinaCat points out, here in our district they allow you to buy back the car, even in a NO asset 7 if you are over the exempted amount. we just brought in a copy of the kelly's blue book value and it was fine, but we only had one car.

our atty did point out that if the trustee didn't believe us about the value she would assigned an appraiser, it didn't happen.