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I took out an auto loan for girlfriend who is now filing Ch7

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    I took out an auto loan for girlfriend who is now filing Ch7

    Folks,

    My (live-in) GF will be filing for Ch7 (just got a garnishment order, so likely emergency). Pretty simple case in my understanding -- she works barely above minimum wage, no assets, no active credit cards, etc. However, I bought a used car over a year ago for her. It is registered in my name, and I auto-pay it with the bank -- but she pays me back each month. Presumption that I will transfer the title to her when it is paid, but there are no legal papers anywhere except between the bank and me.

    Should we list this as a debt to me in the papers? Is there a better way to handle it? She is paying that amount, plus her part of the rent, to me as cash -- and the sum is about half the house's rent, so we could call the cash transfers her half of the rent, and I'm letting her borrow the car in return for paying insurance and upkeep .... but that really rubs me the wrong way and seems to be asking for trouble too.

    Ideas?

    Perferring to avoid a lawyer, but mostly due to the pain of finding one that takes our legal insurance, and doing so in time to stop the garnishment (6 days from now).

    --randy

    #2
    I should mention -- if it is listed as a loan between her and I and discharged, that is OK (although I'd prefer it to be reaffirmed). I don't want an issue showing on *my* credit, as I'm nicely four years post-BK and starting to look into a house.

    Comment


      #3
      If there are no "legal papers" between you and the girlfriend, and the car loan and title are in YOUR name, then there is no asset or corresponding liability with respect to the girlfriend. It is YOUR car and YOUR debt. The "informal agreement" you have with your GF to make the payments is just that--an informal agreement. If your GF files for bankruptcy, she should not list the car anywhere in her schedules--she has no ownership interest in it.

      Your GF should not file for bankruptcy without an attorney, because having expenses which she pays towards, but are not in her name could cause complications. Also, if she needs to stop the garnishment, she can either file an emergency BK petition, or alternatively, request a hearing in the court where the judgment was awarded to object to the garnishment on hardship grounds. Many states have a procedure for reducing or suspending wage garnishment, if such garnishment would cause an undue hardship for the debtor.

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