Possible Ch7: Auto Issue and Exemption Questions

[alo]

Trying to stay within Ch 7 but I do have a couple of assets...

1 - We have an old car worth 3K (kelly blue book) and the allowable exemption for a car is 1K. We would like to keep it. So, what can we expect? Will the trustee ask us for 2K? And, what is best way (or most common way) to get this 2K...borrow from family? Could this push us into a Ch13?

2 - We have a newer car with a payment. It is worth a little less than we owe. My guess is that we can keep it and keep making the payment as usual. Any other possibilities? Could the trustee attempt to get the payment lowered on our behalf and then put us into Ch13?

3 - We have a tax refund coming to us soon. About 3.5K! And, I see where others recommend using that $$ before filing for necessary household items...food, clothing...or prepay living expenses like the electric bill. PROBLEM, in looking at our records, won't there be a month or two at least before filing where it looks like our expenses were super low?!?! Might this push us into a Ch 13 if it looks like we have DMI?

4 - Can I buy a computer with the tax refund as a "tool of the trade" so I can work from home. My dinosaur is so slow... Or can I buy one on a payment plan and keep affirm it?

Thank you!!

[justbroke]

1 - We have an old car worth 3K (kelly blue book) and the allowable exemption for a car is 1K. We would like to keep it. So, what can we expect? Will the trustee ask us for 2K? And, what is best way (or most common way) to get this 2K...borrow from family? Could this push us into a Ch13?

If you are married and filing together, you get to apply $2K. Additionally, if you aren't claiming the homestead exemption, you have another $4K each each a wildcard. More later...

2 - We have a newer car with a payment. It is worth a little less than we owe. My guess is that we can keep it and keep making the payment as usual. Any other possibilities? Could the trustee attempt to get the payment lowered on our behalf and then put us into Ch13?

You would either need to reaffirm the loan or you may be able to ride-through. If you're filing with an attorney, you can ask them about ride-through versus a reaffirmation. Hopefully the interest rate is low and the payments are affordable.

3 - We have a tax refund coming to us soon. About 3.5K! And, I see where others recommend using that $$ before filing for necessary household items...food, clothing...or prepay living expenses like the electric bill. PROBLEM, in looking at our records, won't there be a month or two at least before filing where it looks like our expenses were super low?!?! Might this push us into a Ch 13 if it looks like we have DMI?

Your "overpayment" is what is refunded to you. That $3.5K counts as "income" and your Trustee and/or your Attorney will divide it by 12 to come up with the additional "monthly" income that you really have. That's about $300/month more. (If any of this is earned income credit, then that amount(s) doesn't count.) The usual recommendation is to spend it down before filing. you could even use some of it for your attorney! Whatever you spend it on, you may still be over the maximum disposable income calculation. This is something you'll need to work on with the Means Test and your attorney.

4 - Can I buy a computer with the tax refund as a "tool of the trade" so I can work from home. My dinosaur is so slow... Or can I buy one on a payment plan and keep affirm it?

Yes... why not since I don't see anything wrong with a purchase. However, the payment plan thing is interesting since it could create another "expense" and may be a strategy to offset some of your disposable income. That's another thing that would be part of your bankruptcy pre-planning strategy.

[alo]

Thanks for your feedback.

Regarding the computer payment plan, that could be an interesting "expense" to offset more of my DMI. I will check with an attorney (once I hire one). I assume a good attorney will be able to advise on allowable exemptions and ways to maximize expenses and minimize DMI.