American General Finance/Furniture Repo/BK

[treehugger1]

AG sued me in small claims for a $1500 unsecured loan. Would they want the furniture? That's hard to say. I would guess that once you take the furniture outof a store, you immediately lose 40% - 50% of its retail value.

If they want it, then you can get replacement furniture at second-hand stores, garage sales, etc. With so many folks with employment issues these days, I see some pretty great deals.

BK is certainly an option.

[BigJohn]

I am confused by your 2nd line???????/

So Am I. I mistyped. I meant to say the loan is probably a secured loan but probably will be treated as an unsecured loan.

[moonbeam9209]

So Am I. I mistyped. I meant to say the loan is probably a secured loan but probably will be treated as an unsecured loan.

Thanks for clarifying, I guess if we do file, then we can always reaffirm with them later, right? Hopefully for less money. I'd rather keep it if possible.

Just to confirm, They do have to go through the court system first, right? I am understanding from what I read that they have to send me a letter demanding it back first, and then going to court? Not sure if it would be small claims, since I owe them around 6k...

My other big cards are Discover for around 12k, AMEX for about 5k, Capital One (3 cards combined around 2k, Citibank/HDEPOT around 8k, GEMB/Sams around 7k, Target 9k, JCPenneys, 1200, Kohls, 1200, BOA, 7000...

[catleg]

I can tell you that my phone was unusually busy the last few days with eager sounding people calling to say things must be taken care of by close of business Friday, or the end of the month, whatever.

I think a lot of these companies really don't want their bad loan stats to get any worse, the whole picture for the collections industry has to be very bleak.

Unemployment up.
Value of collateral down.
Equity extracts from housing gone.

They should just use some of the TARP money to cover our minimum payments for a couple of months so they can float a few more stock offerings.

[moonbeam9209]

I can tell you that my phone was unusually busy the last few days with eager sounding people calling to say things must be taken care of by close of business Friday, or the end of the month, whatever.

I think a lot of these companies really don't want their bad loan stats to get any worse, the whole picture for the collections industry has to be very bleak.

Unemployment up.
Value of collateral down.
Equity extracts from housing gone.

They should just use some of the TARP money to cover our minimum payments for a couple of months so they can float a few more stock offerings.

Yeah, I've thought about telling AGF to use some of the money they paid to the execs for bonuses to pay off my balance.

Actually, once when a collector called me I was having a bad day and she said "can we go ahead and get this paid today" and I said sure, why don't you write a check for it, and it will be taken care of?? I was not nice, but now I just don't answer the phone.

[moonbeam9209]

Thanks for the advice. Point(s) well taken. I am going to make some calls and speak to an attorney. I have been reading some of the stickeys, and taking it all in.

So if we do file, what's the chance that they will make me sell my car and buy something cheaper? I live in Georgia, and I think the bk law allows you to keep something like 2k in equity in a vehicle...

With that said, my credit Union (who is helping me with my mortgage, and I also owe about7k to a credit card on) said they will give me a loan against my car to pay the card off that I have with them. I am wondering if that would be a good idea, instead of losing my car and then I will have a loan with them, so it couldn't be seized...

[moonbeam9209]

OK, first you need to read some of the sticky's that will answer a lot of your questions.

Now, first and foremost, being self employed is irrelevant to your financial problems, your are not collection or judgment proof and will have to seek some type of BK protection. If a creditor sues you you can end up with the Sheriff at your house every week opening your mail (you will not be allowed to open your mail) seizing any checks, cash or receivables from your self employment. You can have all your bank accounts seized, your vehicle seized (its a free and clear $12K assets) and your house leaned on. My intent is not to scare you, but to make sure you fully understand that you cannot simply ignore this. When you are self employed or own your own business then once you are sued the plaintiff will ask the judge to sign a writ authorizing the Sheriff to seize your account receivables to pay the judgment off in addition to the other things I listed.

You need to talk to an attorney since you are ripe for the picking with a free and clear car, a house and income or accounts receivable. You will need help in figuring out your exemptions and such.

On to the furniture; you need to review the contract and find out if there is any language for a security interest in the furniture. Then we get into if the security interest has been perfected etc.

I wouldn't make any agreements to pay anything on the furniture until you decide what it is your going to do. It could all just be wasted money if you file.

But read some sticky's every day and work on reading those, schedule to see a couple attorney's, then post back what you found out and any more questions.

I was reading that you can you can use part of your homestead exemption towards your auto to prevent it from being seized. Do you know if this is true? (we bought our house almost 2 years ago and pd 243,000, we owe around 193,000) but I have to believe it can't be worth much more than what we owe, since home values have dropped so much, so in turn, we prob. wouldn't use all of our homestead exemption when we file. Ga allows 20k in equity in a home, and I believe 3400.00 in a car

[treehugger1]

Interestingly enough, two years ago when my financial difficulties were written on the wall, I had an unsecured loan and an auto loan with a credit union. I clearly explained that I was having difficulties and it might be in their best interest to refinance the auto and use the proceeds to pay off the unsecured line-of-credit. They actually obliged. Keep in mind that I felt it could be 8 - 12 months before I would ever declare BK. I have not declared a BK 13 (20 months later), but getting the CU to refinance and include the unsecured line was one of the brighter things I feel I did. The principle owed on the car is well within the auto exemption allowed for my state. I make the payments, and by the time the car is paid off, I will own a car that is exempt from seizure under the exemptions in my state.

Everything is a giant "game." Currently everyone is a player, from the big national banks to your local credit unions.

[moonbeam9209]

Interestingly enough, two years ago when my financial difficulties were written on the wall, I had an unsecured loan and an auto loan with a credit union. I clearly explained that I was having difficulties and it might be in their best interest to refinance the auto and use the proceeds to pay off the unsecured line-of-credit. They actually obliged. Keep in mind that I felt it could be 8 - 12 months before I would ever declare BK. I have not declared a BK 13 (20 months later), but getting the CU to refinance and include the unsecured line was one of the brighter things I feel I did. The principle owed on the car is well within the auto exemption allowed for my state. I make the payments, and by the time the car is paid off, I will own a car that is exempt from seizure under the exemptions in my state.

Everything is a giant "game." Currently everyone is a player, from the big national banks to your local credit unions.

Wow, that is a coincidence. So are you saying you never filed? I know I will still probably have to file, but am waiting to talk to a lawyer. I actually called one today, but we are playing phone tag.

The odd thing was a few months ago when I was discussing this with my credit union, they agreed to the auto loan, but asked me to send them the original title. I told them I didn't even know what type of interest rate they were offering or the terms, so I wasn't just going to send the title. Also, at that point, I wasn't worried about filing bk just yet, so I didn't concern myself with the fact that they didn't reply when I told them I wanted to know the terms. From what they have told me recently, that would still be an option, so I will try to move forward. They were planning on giving me a loan for 15k, and if I used 7k of that to pay them the money I owe them on their Visa, that would leave me 8k, but I am not sure if I should some of the leftovers to make a settlement on the furniture, or what....I am sure that eventually all of the creditors will have judgements against me. Am I just maybe better off only taking out a loan on what I actually owe the CU for the Visa? At that point, I think I would still have enough of an auto exemption left.

I am curious to hear what the lawyer has to say, or is it possible that he won't give me such detailed advice if I decide not to move forward with bk???

This is all so confusing....

[treehugger1]

Yes, you can be incredibly creative. In my case, I owed the credit union two loans; one a car loan and the other an unsecured personal loan. They agreed to refinance the car and use the "proceeds" to pay off the unsecured. This left me with an automobile (An AWD that is truly needed where I live) that in a worst case scenario could not be seized because my equity in it was well within the exemption limit in my state. Now, I knew I would not be filing BK for months, or possibly years, so any look-back issue from a trustee would be beyond 12 - 18 months. In the meantime, I stopped paying on unsecured and have kept my vehicle loans to an amount that is protected under exemptions. I know I may sound like a deadbeat, but the truth is that eventually I will need to file. Since I am not exactly a "youngster," I have continued to put as much as I can into any tax-deferred and protected exempt assets that I can. I continue to explore debt settlement situations, but when you can't pay, well, you can't pay.

In 2 1/2 years, I can pull the plug with my employer and retire on a pension plan that puts me close to the "poverty level." The other TDI's remain within state exemptions and outside of the district BK trustee's reach under my current state laws. I would not need to touch these protected assets for several years. My state does not honor the federal BK exemptions, and the state exemptions under BK are somewhat more liberal than the federal exemptions. The laws in my state are open to everyone who chooses to study them. So far, I have not (and do not intend to) break any laws/statutes. But, I have learned that laws exist for those who care to apply them; lenders and borrowers!

Researching and planning a future BK is not illegal. In fact, for many, it is nothing more than financial planning and protection. As mentioned, most BK attorneys will "roll their eyes." But, their job is always easier if you have not muddied things with lawsuits, judgments, etc. All of these are surmountable obstacles in a future BK filing. Much of what I've seen locally in terms of vacating judgments after a BK can be done with minimal effort, and at a very low cost. Hell, we have "court forms" to do such things. I don't need to pay an attorney what I can clearly do for myself.

For me, a BK 7 seems quite plausible in 2-5 years. Many of my "alleged debts" are now in their second and third hand-offs to CA's. I have kept excellent records of the history of the paths (CA's, JDB's, collection attorneys, etc) and I'm beginning to realize that in the future a pro-se, no asset BK7 filing is within my ability. Until then, I intend to help out my family and come up with a plan for my student loans. Nothing ventured, nothing gained as they say.

The fact that I have no assets and nothing but wages to garnish is not the normal situation on this board, but I am quickly learning that I am not alone with respect to this situation. On the other hand, I have learned that debt is nothing other than that, debt. A car is only a car, and wages are only wages. I am truly fortunate.

[moonbeam9209]

Once you meet with an attorney and you know if your going to a 7 or a 13 then we can help you deal with your car. Right now the car would a be problem in a CH7 case its worth to much. Now your on the right path to encumbering the asset to protect it, that is one good option. But no real point in paying out good money to the CU just to keep the car. In the end if you end up paying $7K to the CU to keep the car its not worth keeping the car.

Soooooo, this why you need to know how much of the car you can exempt. I had a similar problem I had six vehicles from a failed business I owned. But I had a friend who loaned me $30K (no really they did) and we did a promissory note and a UCC filing (I did that so I can keep all the vehicles in my name but they were still pledged as collateral to someone else in the event I got sued).

So, you can get a loan out on the car then use that money to pay into a 401K or use it to pay down or buy EXEMPT items that at least make it worth borrowing the money on the car. What you have to understand is, if you get a loan on the car and file a CH7 the trustee 'may' want to know where the money went. So if it went to general living expenses (in the mean time money you get from other sources goes into a 401K, buying exempt items etc.).

You have to get a bit creative but still be very legal in what you do. You may even have a friend that would like to "buy" your car for FAIR MARKET value and give you cash. I stress fair market value. You then take that and put it in a money market, and buy some exempt items you can later sell and money you can get back out of the 401K to "buy" your car back after your CH7 is done.

I mean I sold all my vehicles except for two that are less than the exemption. Personally, I would borrow against the car what I need to keep the equity in it exempt. You are also allowed to buy back from the trustee any amount that is over so long as it not a huge amount. Keep in mind your buying back from cash you have and you can't have to much cash on hand. You can also trade exempt items. I know all this seems odd but its is doable, however, when you start this type of stuff your attorney's eye will roll into the back oh his/her head, they hate this type of stuff, its out of the norm and it will cost you more too.

So, you really need to decide is the car worth the hassle or are we better to sell it (I mean really sell it) pocket the cash (since no one really knows how much you got for its as long as it was a fair market value) and then place those funds into exempt places. You can even pay down your mortgage with the money if it would help.

Then after BK you get a used car for awhile and deal with it. Remember its only a car.

But the last thing I would do is pay the CU and owe money on the car. That is flat out money right out of your pocket you will never see again.

Wow, that is some friend! I understand your point now about taking a loan on the car...l never thought about it before, that would be like paying an extra 7k for a car I already paid 26k for...duh...

I guess I was thinking that it would be a good idea to pay the credit union instead of anyone else because I might need them in the future, and also, I know this may sound really STUPID, but in 07 I bought my van with cash from a Dow Corning settlement (my mother died in 98 from Autoimmune disease from her breast implants) and we finally got the money 8 years later. Sooo it is kinda sentimental (yes, I know it's a car) and also I know it is a reliable van. I have 3 kids, and live kinda in the middle of nowhere and my husband is not always around depending on work schedule, travel, etc.

Also, in regards to ch 7 or 13, I am almost positive that it will be ch 7, because our income is so sporatic since my husband is starting his own handyman business, and I cannot show any really stable income. I can't commit to any budgetable payments...I am just hoping that it gets better before it gets worse.

Just want to say THANKS for all of the good info.. I have so many questions and you guys are really great!

[moonbeam9209]

Soooooo, this why you need to know how much of the car you can exempt.
In Ga, you can exempt 3400 per person, but my husband has a 2k (bal) loan on his 03 Hyundai which is worth 5k so he will prob need his exemption.
Is it true that you can use part of your home exemption towards your car?

So, you can get a loan out on the car
My credit is baaad and I don't think anyone else will give us a loan on it



Then after BK you get a used car for awhile and deal with it. Remember its only a car.
Yes, it's only a car, but what will I drive inbetween the time I sell it and the time after I file?

But the last thing I would do is pay the CU and owe money on the car. That is flat out money right out of your pocket you will never see again.

Do you think there's any benefit to paying them over others????/

[moonbeam9209]

I am just confused as to how do I know when I really NEED to file? Do I wait for the indications that they are gonna sue me, or what??? I have 10 possible credit card companies that could come after me, and the furniture people, etc.

If I get a lawsuit against me, is it too late at that time? I have to say, the phone calls are lessening a bit, I am assuming that is because the debts are being sold? Could it actually be years before anything happens? Woohoo at that time my car would be worth much less....

[moonbeam9209]

Just an update...my phone was quiet for a few days after the end of the month, and then lo and behold, she calls again yesterday (the 8th) and says "we only have so much time that we can help you"...blah, blah, blah...

I am just wondering if we should try to set up some sort of small payment plan to them so we can keep the furniture, or is that just saying that we owe the whole amount? We cannot afford at this time to make a cash settlement. (the amount owed is 6k) and we are probably a couple of months away from filing. We still need to sit down with a couple of lawyers.

[justbroke]

I am just wondering if we should try to set up some sort of small payment plan to them so we can keep the furniture, or is that just saying that we owe the whole amount? We cannot afford at this time to make a cash settlement. (the amount owed is 6k) and we are probably a couple of months away from filing. We still need to sit down with a couple of lawyers.

Don't set up any payment plan. You need to deal with this inside the Bankruptcy. If you really want to pay it off, then you file and then "redeem" the debt. That is, you end up paying it's current value (not the balance).

I'm not sure when they'll file their lawsuit to recover the property, but you may have a couple of months. Why not start looking at some lawyers now?