Question about means test North Carolina

[nojokebroke]

We went to do a consult with an attorney yesterday and were told we are over the means test for chapter 7. It is only by a about 400 dollars. We don't have a car payment as they repossesses that already. We have a house that is current that we plan on keeping. We have only has it for about 2 years and it is current. Anyway the attorney kind of suggested buying a car that the payment would help pass the means test. Does this sound right? I just have trouble wrapping my head around how more debt would help?

Char

[keepsmiling]

Hey NJB,
Welcome to the forum!
And welcome to the bass ackward world of bk
Sounds like you have a good lawyer. This is advice we give regularly to be able to enter a 7. If you can do it, go for it.

[TXskyblue]

Yes, your attorney is right.

Note, however, that you are not buying a car for the express purpose of meeting the means test. You are buying a car because, after bankruptcy, it can be hard to purchase a vehicle on credit. Therefore, a new car should be dependable and last for several years until your credit situation improves post-BK.

This is commonly done in a 7 or 13. As long as you don't buy a luxury car, you should be ok. I've heard the $500/month figure quoted here as a cut-off, but I'm not sure if that's accurate. Mine is almost $550 and my lawyer said it is fine. My 341 is this month so we'll see if the trustee says anything.

You'll want to buy the car before your become delinquent on your accounts, if at all possible. Your APR will redline if you wait until after you start missing payments on your credit cards.

[tobee43]

or you could eat a bit more. look at your budget at it stands and see if there are any increases you may have over looked.

example was i recall at my 341 the trustee actually said to me, don't let MY husband see your food budget i'd be in trouble! the entire room broke out laughing. but truth is, we just don't eat much and i put down $200 monthly while my atty said you could have easily put down $800 and it wouldn't have been our of place. medical expenses, for example, i have a doctor who put me on that a really expensive over the counter med, i put that in for certain. so make sure you have every single expense added into the costs you are listing.

so before you go out an buy a new car you don't need or want, nor the extra insurance and upkeep costs, re think what you have written and see if you can work that $400 into what is already listed and can be increased slightly. while you want to be as truthful and honest as absolutely possible, this also allows you some leeway in your expenses. again, just worth a try to roll it in to your already existing expenses.

we really didn't have to worry anyway as we were minus close to 3k on our means test.

[AngelinaCat]

Yes, your attorney is right.

Note, however, that you are not buying a car for the express purpose of meeting the means test. You are buying a car because, after bankruptcy, it can be hard to purchase a vehicle on credit. Therefore, a new car should be dependable and last for several years until your credit situation improves post-BK.

You can believe this one!

We discharged from a 7 August 2008. Without doing anything in particular, except paying cash or doing without, our credit score got to around 670. This year, we went looking for a good used moderately priced truck.

After three hard pulls from three different dealerships, (but all owned by the same person. That is another story!) our credit scores tanked. We got the truck-from a different person--with a loan from our CU, which we were going to do all along, and the crooked three all knew this--but our rates are nowhere as good as they would have been if we had not gotten involved with the crooked three.

The other day, I applied for the 'Bill Me Later' feature with PayPal, and was denied on the basis of having a credit score of 546.

[LadyInTheRed]

The OP has already had a car repossessed, so probably won't get very good rates. But, if she makes payments on time, she may be able to refi at better rates after a year or so.

toobee43 makes a good point that you shouldn't buy a car that you won't be able to afford after your BK. But, I'm not sure how easy it will be to find another $400 in expenses to help you pass the means test. On the means test, you can't increase most of your expenses beyond the local and national allowances unless you have a really good, documentable reason to do so. You may be able to do that on Schedule J to avoid a totality of circumstances objection if some of your actual expenses are lower than means test allowances. But, you have to pass the means test before you get there.

[nojokebroke]

Thanks everyone for the advice. The means test is one reason for purchasing however the current car we drive is 18 years old and we are still driving it although my husband hit a deer with it. We've just been in this mode to not buy anything large because we knew we were planning on doing this. We really didn't realize it would possibly help. We definitely aren't looking for anything large.. not thinking of BMW, Mercedes or the like.. I have a 30 mile commute so I'm thinking more along the lines of a Chevy Spark.

[keepsmiling]

Thanks everyone for the advice. The means test is one reason for purchasing however the current car we drive is 18 years old and we are still driving it although my husband hit a deer with it. We've just been in this mode to not buy anything large because we knew we were planning on doing this. We really didn't realize it would possibly help. We definitely aren't looking for anything large.. not thinking of BMW, Mercedes or the like.. I have a 30 mile commute so I'm thinking more along the lines of a Chevy Spark.

then it's a no brainer! get yourself something reliable. good luck shopping this weekend! let us know how you make out

[AngelinaCat]

I wish I could send you a nice 2007 Chevy Silverado for 7K, but it won't fit thru the 'phone wires....

[ValleYum]

If you do buy a car, make sure you allow 30-45 days for the vehicle to be titled/registered.

[nojokebroke]

Well we got a car yesterday. Just a normal run of the mill Chevy Spark like I was wanting but now I'm worried. The dealership said they don't have banks open on Saturday and I'm afraid when I go back tomorrow they are gonna take it back. It was no money down and just my clunker 95 Toyota Camry in trade that was only worth 500 because of the deer. I am pretty sure the dealership wouldn't let me off lot with a brand new car unless they were sure I was sure to be financed. I'm probably worrying for nothing but all is supposed to be final after work tomorrow.

[LadyInTheRed]

I am pretty sure the dealership wouldn't let me off lot with a brand new car unless they were sure I was sure to be financed.

You would think so, but it sounds like that is exactly what happened. There is probably something in the paperwork that makes the sale contingent on the loan being funded. That is very common. If the loan is not funded, they may offer you a different loan, probably with less favorable terms.

ETA: Here's some good info on this practice: http://www.ucan.org/blog/gasoline_au...anced_contract Note that the website is for a California organization. So, the specifics on the law, like the 10 day limit to cancel the contract, may be different in your state. But, it's a good general explanation of a common practice of dealers.

[AngelinaCatHub]

It grits at me to go into debt to get out of debt, but I see here that it may be wise to do. Eighteen year old car? No need to excuse yourself from not purchasing, that's for sure.

I feel strongly that you may end up getting a bad deal as these guys make more money on the financing than the car. In the event you get a hassle, I would "play the game" and explain that this debt CANNOT be discharged as it is too close to BK. That you "already have an alternate lined up" that you could use if they do not follow through. Tell them that "part of something is worth more than all of nothing" if they do not wish to do business. Be tougher than them. Buy on your terms.

I wish you well and please let us know the results. 'Hub

[LadyInTheRed]

It grits at me to go into debt to get out of debt, but I see here that it may be wise to do. Eighteen year old car? No need to excuse yourself from not purchasing, that's for sure.

I feel strongly that you may end up getting a bad deal as these guys make more money on the financing than the car. In the event you get a hassle, I would "play the game" and explain that this debt CANNOT be discharged as it is too close to BK. That you "already have an alternate lined up" that you could use if they do not follow through. Tell them that "part of something is worth more than all of nothing" if they do not wish to do business. Be tougher than them. Buy on your terms.

I wish you well and please let us know the results. 'Hub

I agree with this, except for one thing. Do not mention anything about a discharge or bankruptcy. That is not going to help the negotiation.

[AngelinaCatHub]

I agree with this, except for one thing. Do not mention anything about a discharge or bankruptcy. That is not going to help the negotiation.

Pardon me, you're right. I wasn't thinking. Thanks for the catch. 'Hub