Relocation and car purchase prior to filing

[Grumpy2]

OK, I'll spare you most of the sob story that resulted in us living in a city we can't afford with rent we can't afford. I have 20k in unsecured debt. I have a 2011 minivan that I owe 3k more than it's worth and a 2009 car that I owe 4k more than it is worth. My total debt payments are 1500 a month. Couple that with renting a tiny apt for 1550 in my area and it is really putting the hurt on. As if that wasn't enough, child number 3 is on the way. (not planned...birth control is really only 99% effective) My wife can't make more than the cost of child care either. We don't own a home. I have 35k of student loans too. Anyway, we are still making our payments, but we fall behind and incur more credit card debt every time something happens or goes wrong. I am thinking it is time to file CH 7 and wipe out everything and start over. Before I file, I am thinking of planning some moves.

1) I want to buy an older minivan for under 13k, and a cheap old corolla or something for under 5k. Can I buy those two vehicles on my good credit before filing and reaffirm the loans in court? I will attempt to sell my cars that I have in the process.

2) Secondly, we need to relocate to somewhere cheaper to live, with more space for kid #3, and that is near a school for me to work on getting a better degree. Can I put the relocation expenses on the card and file 90 days later? (horrible I know...but we can't afford to move either) We have been trapped in this apartment for over a year because we can't save up a deposit to move. I'm afraid this will ruin my education plans for 5 years because the negative credit item makes it so I can't get a GradPlus loan without a cosigner.

Finally, the attorney I consulted with wants 2500 bucks! eek! (4.6k for a CH 13). He said I could probably do the cars, but no one he has met has attempted something like that.

[Drazil65]

Hi, first thing I would suggest is to make a few more appointments with attorneys. That is the only way you will be able to know for sure what the going rate is for your area. Second I guess I would sell the vehicles you have now and get the cheaper older ones. Make sure you keep a good paper trail of the entire transaction.

I am not sure about putting the move on the CC, I think I would check around for a cheaper bigger place first and see if I could not get the landlord to take the deposit in installments. If it were alot cheaper than where you are now then the new monthly rent with an installlment payment for the deposit added on might still be cheaper than what you are paying now. Also remember that once you stop making payments to your unsecured debt as you get ready to file you will have more cash on hand to make the rent payment on the new place.

Dont forget to research and setup Google Voice (free) and change those contact numbers with all your creditors so that you do not get all the phone calls, less stress! This is all doable but will take some research and planning on your part. Create a timeline and start putting things into motion little by little and wjile you are visiting with attorneys. Good Luck!

[Grumpy2]

Heh...I will keep my phone for fun and hope they call to harrass me after it is illegal to do so.

[keepmine]

Were I you, I'd stop paying on all debt you wish to discharge and use that money for moving expenses and legal fees. Can you put your student loans in deferment?
Once bk is a viable option, you need to put those credit cards away.

[keepsmiling]

Heh...I will keep my phone for fun and hope they call to harrass me after it is illegal to do so.

Be aware- this is NOT fun. You will get calls the day after your first default, all day long, filling up your machine. It will continue until you file, could be months with what you are talking about. You won't want to have guests in your house wondering why you don't pick up the phone or hearing the message coming over the machine.

[keepsmiling]

Also- do you know what the exemptions are in your state? Can you use unused home exemption for a 13 k car? You need to know this before doing anything car- wise.
Oh and you can turn the phone back ON post filing to catch the violators.

[Grumpy2]

Well, I would be getting a loan for the 13k car and the 5k one with the intent to free myself of the $49,000 of vehicle debt I have now. I have no equity in anything at all and live check to check. Correct me if I am wrong, but I don't think exemptions will save me from losing a car if I don't keep paying for it and I have no equity. I would like to have the satisfaction of at least paying them off though... I think I can sell the cars I have now and pay off at least $40k of the $49k. From there I guess I could try to pay off the cards on my own and perhaps stave off bankruptcy. I haven't been able to find any buyers though. (I've been trying to sell the older one for a year and it is newish with factory warranty....) An all wheel drive pontiac that gets 26mpg isn't too popular in sunny california at even the lower end of the blue book pricing.

[SMinGA2]

The problem as I see it with the cars: sounds like you have 2 car loans now, and you don't want to roll them over into new car loans. (Due to the negative equity.) Except for buy here pay here type deals, I don't think anyone will give you financing unless you pay those off.

Consult with several attorneys. The fees for a chapter 7 will vary a little, but keep in mind the old adage: you get what you pay for. If your case is very simple, you may be able to pay less. But any complications, and you'll need an attorney willing to work for you. Good attorneys cost more than lazy ones.

I don't know about the moving expenses on a card question. Technically speaking, it would not be right to make charges if you know you have no intention of paying them back. As to whether or not you could get away with it? Is it worth the risk?

[Grumpy2]

Yeah, I get the fraud aspect now. I think I can get a loan, but I am also very concerned about the clause prohibiting sales of assets for less than loan values in the 2 year period before bk. I can sell it at market value but risk getting in trouble.

[SMinGA2]

Where did you read that you can't sell items for less than what you owe on them, leading up to a bankruptcy?

What you are thinking of is not a problem, as I understand it.

If you cannot sell the vehicles for what you owe, due to market conditions & vehicle value - that is not a problem. Getting as much as you can for them, and getting out of high payment car loans to improve your overall cash flow situation is a smart thing. The problem is when you sell assets for less than they are worth, especially to family/friends. Let's say you own a car outright that is worth $25,000. You don't want to lose it in bankruptcy, so you sell it to your brother for $5,000. That would be a problem. At the moment, you don't have an asset in these vehicles. All you have is debt since you owe more than they're worth.

If you are able to sell them, keep good records. Perhaps even get an offer from Carmax (or somewhere similar) showing what they would offer. You can't sell a car for more than its worth, and its worth is set by the market (potential buyers). Of course in order to transfer clear title, you'd have to make up the difference. Would you be able to come up with $7-9k cash?

One other possibility: schedule your bankruptcy filing strategically so that you stop paying for the vehicles shortly before filing, and save up the car payments to buy vehicles once you are discharged. Its a little of a gamble, but if the vehicle payments are large you may be able to work something out. Such as if you have a payment due on August 15th, don't make it. Plan to file by Sept. 15th - 30th, as the cars are not likely to be repo'ed before 30-45 days late. (Make sure you can exempt the saved funds.) Keep saving the payments, and many report the ability to get car loans just after discharge. If you have $1500-2000 down, you should be able to get into vehicle loans of the amount you described.