Filing Chapter 7 in a week and needing some advise

[sunnyinaz]

Hello, First off I am so glad I found this forum, after all the time surfing the internet- finally!
I will be filing Chapter 7 this month. I am married but filing individually, the debt I have is prior to my marriage solely in my name.

I have a question if anyone can advise. I live in Arizona.

1. I have a vehicle in my name, my final car payment is due first week of next month. Arizona has a $5,000 auto exemption law and because we are an Opt-Out state I can't use the federal "Wild Card" in addition. I am concerned that the value of my vehicle, according to KBB and NADA may be $2K over the exemption for trade in, but I've read that the Trustee actually goes 30% below what KBB or NADA shows for value as these tend to be higher than what the true resell value is and they are actually looking at the Black Book value or Quick Sale value plus their cost to the auctioneer and the Trustee's share of what they make off the sale, anything left over to the creditors. Plus if he/she takes my car they have to pay me the $5,000 for the exemption.

Does anyone know more about this? How does the trustee really determine my car's true resell value, is it true, below KBB/NADA value? How much is typically paid to the Auctioneer and what is the Trustee's cut? I've heard that if there isn't much left over the Trustee won't bother with it.

My thought is that if there is a risk that the trustee will take my car then why would I make my final car payment? As this would be a waste of my money. Plus right now with the balance of my car loan due, it helps with the exemption/equity.

Thank you

[AngelinaCat]

Hi sunnyinaz, welcome to the forum.

It's hard to say about the car. It would definitely help if you had a few more payments to go. We had about 10 left on our car. Florida only allows $1,000, exemption for a vehicle. And being a 2004 VW Jetta Wagon TDI, was worth about $7,500.00 KBB trade-in at the time we filed.

Our trustee chose to 'Abandon the Vehicle as being fully Encumbered (the car loan) and/or Exempt' (the exemption). In other words, the trustee decided he didn't want to be bothered with it.

In your case, the trustee may choose to abandon the vehicle, because of your generous exemption. Or he may choose to let you purchase the non-exempt portion of it back from the BK estate.

When Des comes on board, he can advise you better, as he is a practicing BK attorney, and from what has been posted, I believe is in Arizona.

Good luck to you!

[jst4f]

The TT does need an auction to sell the car, s/he can just go to a Carmax, or equivalent, and sell it. In CA we used the Carmax value for the petition and not KBB. What the TT will try to sell is up to the individual TT. There is no formula on how much equity is worth going after. The closer to zero equity you can legally get, the better.

In our case the TT used the values we supplied in our petition and never questioned it. Perhaps the value of an attorney that was well known by the local TTs with a good reputation. Keep in mind, the TT gets paid $60 per petition which isn't enough to go on a fishing trip unless they smell money. An honest and complete petition goes a long way with a TT. Work with your attorney to present the best picture you can to protect you and be very sure your petition is complete and accurate.

A fresh start is a great feeling and is worth the price we pay to get it, even if you lose a car. Don't lose sight of the end goal.

[sunnyinaz]

Thank you both for your response.

The Trustee is an attorney, In AZ they are paid for each petition and I believe a % of assets they take and liquidate in Ch7.
I'm really hoping, like in your case AngelinaCat, that the attorney will abandon my vehicle as their isn't enough money to be made.
I know that I would have the opportunity to purchase the non-exemption portion back to keep it but how would that work since AZ has a cash exemption of $150. So I guess I would have to get into debt to get out of debt which doesn't make since but then I remind myself I live in Arizona The debt I have is OLD but within the statue of limitations which is why I'm filing, so it's not like I've been paying on my credit cards and now I've stopped, in other words, I don't have room in my budget to come up with a lump sum of money or a new payment plan and it would be a real hardship if the trustee took my car. Uggg so much stress

I guess I'm looking for a little peace of mind in knowing more about the Trustee in AZ so if your friend Des could advise or anyone familiar that would be awesome. AZ is a community state with it's own set of rules.

Thanks again

[jst4f]

The Trustee is an attorney, In AZ they are paid for each petition and I believe a % of assets they take and liquidate in Ch7.

Base pay is $60. They are given an incentive to dig for assets to find and liquidate assets for the creditors by getting a percentage of the liquidated assets. As a result they don't go randomly searching for assets unless they believe there is something worth going after. $60 goes fast at an attorney's hourly rate! Your attorney will know what type of estimates the local TTs accept for cars and that is the one you should use. You won't be the first one to over value their stuff, cars included. I was surprised how little my 2002 car was worth on a quick sale basis.

Some TTs have allowed the debtor to buy the asset back on a payment plan so there are options even if the TT wants it.

Knowledge is power which reduces stress. I recommend that you work with you attorney to fully understand how your BK will unfold. Best of luck

[despritfreya]

There are 3 questions that need to be answered before I can jump into this. . .

1. Was the vehicle purchased before or after you got married? I assume before but I want to make sure.
2. What is the KBB trade-in value?

_________

3. Can you state the initials of your Trustee?

Edt: Never mind about #3. . . I see you have not yet filed. . .Should read things better.

Des.

[AngelinaCat]

3. Can you state the initials of your Trustee?

Edt: Never mind about #3. . . I see you have not yet filed. . .Should read things better.

Des.

However, can you tell what your district is?

Thanks Des for following up.

[btbeme]

A question - how essential is it that you file next week?

A second question - have you pursued a value for your car other than an online value? Perhaps a cash offer from CarMax?

Any other concerns / twists / warts in your filing in any way?

[sunnyinaz]

I financed the vehicle before I got married and if in "Good condition" per KBB $7,615.
Also, the pay off on the loan is $472.


Thanks for your advise.

[sunnyinaz]

I believe my district is Cholla.

[sunnyinaz]

For one my husband is currently unemployed so I qualify for Ch7, that would probably change once he is working again.
I have all of my paper work together, attorney retainer now paid so I have no reason to wait and drag it through another month.

I haven't looked into CarMax yet, sounds like I should.

My other question or what I'm curious about is bank statements, what does the Trustee look for? Does he/she look at the transactions or just the balances?

My car is really my only major asset, everything else including the house is in my husband's name and purchased before we got married, my attorney advised those assets would be exempt.

[despritfreya]

I financed the vehicle before I got married and if in "Good condition" per KBB $7,615.

But is that “trade-in” or “private-party”. You want to use “trade-in” value.

Also, the pay off on the loan is $472.

If at all possible, hold off paying this. It lowers the equity. We are not talking a lot of difference but every penny counts.

Based upon the numbers you have a $2,100.00 problem. Depending upon which Trustee you get you should be able to “purchase” back the non-exempt equity. Some will use your offer as an opening bid at an auction (held at the bk court) and others will simply allow you to purchase it without the purchase being subject to “higher and better” offers. Typically the Trustee will allow payments over a short period of time, 6 months to 1 year.

I believe my district is Cholla.

Actually your District is Arizona. There is only 1 district in the State but there are 2 divisions, Phoenix and Tucson. Tucson covers Pima and Pinal County. Phoenix covers everything else.

Correction. . . there is also a YUMA division - forgot about that one. Since I never use it I can't even tell you which counties it covers. Hearings are also held in Prescott and Flagstaff but those counties are under the Phoenix division.

I'm curious about is bank statements, what does the Trustee look for? Does he/she look at the transactions or just the balances?

The Trustee will look at the transactions over the past 3 to 6 months (more depending upon the complexity of the case). They look for any amounts that are not normal. Typically anything over $1,000.00 is fair game. They are looking to see if there is any $$ they can recover for the estate. As to the balance, you should be at or below $150 on the day of filing. If you had more than say $800 in the account shortly before filing and all of a sudden it is gone. . . make sure you keep receipts on how you spent it. (There is no “rule” as to what was in the account before filing - but if things are not “normal” - hence the reason to look at statements going back in time - you need to be able to explain it.)

Des.

[btbeme]

As Des says, use the Trade In value, and if you can get to a Car Max to get a quote, do so. If those two values line up closely - and they probably will - I suggest using that value for the car.

The Trustee will have a good idea of value. If your value is close, it will likely fly without a second glance. If it is off by more than a little, he/she may look more closely. A CarMax quote is a good one, as it takes into consideration the actual vehicle and condition rather than a generic quote from a blue book - it CAN hold more weight with the Trustee.

Worst case is that you may have to "buy back" some of the value of your car from the Trustee. There are ways to avoid this (such as a perfected lien on the car for the amount not covered by the exemption) but that would take a little time, and the amount in discussion probably isn't worth the effort.