Advice ??

[IvoryAngel]

Hello Everyone,
I had previously posted some information about wanting to file bankruptcy. Without going through all of that. Today I made an appointment and went in to see a third opinion type thing for me. Well, I really like this guy and think that he would work out great. However, we went over some of the details of my case. I explained I had a vehicle that I have been paying on for two years now and will have paid off in March or April of 2008. The title is not in my name it is in the guy who originally bought it. His interest rate is 1% which is way better than I could even imagine getting. He repossed it from his daughter and sold it to me bill of sale until my payments are done then we transfer the title into my name. My relationship with him is ex coworker. We have had no problems or issues with this agreement at all. I am looking forward to owning it myself soon. However, according to the attorney today this could be considered unsecured debit. And he could be forced to pay me all the monies back that I have put into the car because technically I do not own the car. I kinda sorta understand that but then I don't. I mean I have a bill of sale which clearly states that the car is to be held in his name until pay off at which time the title will be transferred into my name. This is a legal and binding document, because I am able to use it to get my registration and tags renewed every year and I am able to obtain insurance coverage with it. The attorney was stumped and said he didn't know how to advise me and wasn't sure if he would infarct recommend bankruptcy. He said he would call me back and let me know something after he received counsel. Anyone ever run across this problem? Have any advice?
Thanks for the Help!

[no_it_all]

Ok,this smells a <little> fishy...Your co-worker has a 1 percent loan on it? He <repo'd> it from his daughter? He then sold it to you but never told the original lien holder he transferred ownership? Yeah, I can see why your attorney is stumped! BTW, what does this have to do with whether or not your attorney recommends bankruptcy? My advice is since your co-worker doesn't own the car (the finance company does) he has no legal right to sell you the car in the first place. Since you have no legal ownership interest in this car, you are basically renting it and I guess that is why your attorney says it is unsecured. It is probably also illegal!

[no_it_all]

This is a legal and binding document, because I am able to use it to get my registration and tags renewed every year and I am able to obtain insurance coverage with it.

Really? How do you know that? I used to get my cars registered at DMV by placing the bill of sale over a silver dollar and hitting it with a hammer. It was my Notary Seal ..not very legal or binding, but I did get the cars registered!

My <guess> is that the legal threshold for ownership is somewhat higher than "well DMV registered it so it must be legal and binding"...good luck, I will be interested in if your coworker gets prosecuted....

[HHM]

This is a tricky one to say the least. I suppose the answer would come down to how the court will interpret this bill of sale, if they interpret it as a security agreement, then the debt will probably be secured debt, if it is merely interpreted as an "option" or some other basic "contractual obligation", then it will probably be unsecured debt. The other wrinkle is that all states typically have specific laws about perfecting security interests in cars. As I am sure you're aware, the typical scenario is that when you buy a car, the title goes in your name, and secured party is listed as a lien holder.

[no_it_all]

<snip>if they interpret it as a security agreement, then the debt will probably be secured debt, <snip>

My guess is that the original lien holder has language in the contract preventing any subordinate liens...especially without their knowledge...

[IvoryAngel]

He purchased the vehicle for his daughter....The note was carried in his name because he bought the car for her she just made the payments. After awhile she decided she wasn't going to pay anymore, her father took the car back. He tried to sell it and was unsuccessful. I approached him because I needed a vehicle desperately, but was unable to finance a car myself. Especially one this new and in such good shape. He has a 1% interest rate with Nissan Credit. I am not in any shape financially to get such a great interest rate. Therefore he sold me the car via bill of sale stating what my payments are and I pay him and he in turn pays Nissan Credit. The biggest negative is that I am not getting credit for payments he is but when you need a reliable easy payment vehicle sometimes its the better way to go. We had discussed adding me to the car with Nissan but my interest rate would go way up and I would not be able to afford my payments. The very first time we went to register the vehicle we got beef from t he clerk. She made sure we understood that he was fully responsible for anything that happened to the vehicle. I do not know everything or claim to know everything. But the DMV is very strick with rules and regulations. I am sure they would not of issued me a tag if it was completely illegal what we were doing. I am sure there are alot of glitches and down falls. Most I do know. This is why I posted the question. I do not know the line in which this falls. I mean really I am not out to get this guy he was generous enough to sell me the vehicle, and continue to carry title in the first place.

[HHM]

Ok, I see, I wasn't clear on whether there was another lien holder. So if I understand correctly: Nissan Credit is the "true" lien holder...the Father is the titled owner and is obligated to Nissan Credit. The father "sort of" sold you the car by issuing you a bill of sale and you make the payments.

On a side note, who maintains insurance?

My gut tells me that if this were left up to the judge, they would probably interpret the bill of sale as a lease, because in the end, all you have is a right to use the car, and probably based on automobile titling regulations, you are not a good faith purchaser, so you don't really have any ownership stake in the car. Which is actually not a bad thing for you, as it will allow you to continue to claim the car payment as an expense. If you maintain the idea that the car is an asset, you may run into some trouble and the trustee may object to you claiming the car payment (because you don't really have any meaningful ownership interest in the car).

Not to mention all the breaches of contract that the father has already incurred vis-a-vis Nissan Credit by selling/leasing you the car.

[AMISLANDER]

I was going to ask how you are insured on this vehicle too...

Are you on the lienholder's policy?

Do you have your own policy?

[no_it_all]

<snip> Which is actually not a bad thing for you, as it will allow you to continue to claim the car payment as an expense.

You are kidding right?? Lemme see if I follow this: Some guys buys a car and finances it with Nissan. He then "sells" the car to a friend, and the friend gets to claim the payment as an expense, even though they have no title and are not on the note in any shape, manner or form? YIKES!! Do you think that scam would work for stuff like houses too? Maybe I can claim my brother's house, even though I am not on the title or mortgage. He can give me a "bill of sale" right? I wonder what would happen if two people got together and expensed the same car note, but on different BK's ??? Only one would be legally responsible for the debt, but that doesn't really matter, right? Say the guy decides to go BK a week after she does...Does he get to expense the car payment that is in his name? Seriously, this has fraud written all over it...from the sale to the BK and everything in-between..

[IvoryAngel]

I carry the insurance on the vehicle. I am allowed to carry insurance and maintain tags with the bill of sale. This is why I was questioning the fact of what the final say would be in court. I get the point that with the car being still held on lien that this is a problem. Honestly, the only problem I saw is that at some point if he decided that he wanted the car back he could just take it. I also get the picture some people find it hard to believe there are still good people out there. He and his wife are good people. I just happen to need a car and he just so happen to need to get rid of a car. I am more than grateful that they allowed me to make the payments on the vehicle and so on. I could be stuck with an upside down vehicle right now if it weren't for that. He originally was trying to sell it for only what was owed on it which was like 9000 he didn't even want more money just pay off and the car was yours. I am positive that he has no intentions on screwing me. I have kept up my part of the deal made all my payments as requested and maintained the maintenance of the vehicle etc.
So back to my original question, and my dilemma should I not even bring this car up? Is there anyway to trace the car back to me? I do have the other car that I have financed for my friend, she makes the notes on that vehicle. And I was advised by an attorney due to the value of the car being way less than its worth I should let it go. I do not care to hide anything from the court be deceptive or anything of that nature. But, I mean really why does it have to be questioned what the relationship of "my car" the one I actually drive have to do with anything. It technically isn't in my name yet. The first attorney said it was Kay to list that car and let the other one go because I had a bill of sale but the person I made payments to would be notified that I have filed bankruptcy. Is there any website that I could pose that question on? I am so confused now. I really need to file. And this has been a huge dead end. =(

[no_it_all]

So back to my original question, and my dilemma should I not even bring this car up?

You know, I was wondering about that myself. Why <exactly> would you want to mention it? What would the reason be?

[bige1030]

I wonder if this would be considered an executory contract to purchase a vehicle, kind of like a lease. Then, you could simply assume or reject it and be done with that decision.

If you need that expense to claim against your income in order to pass the means test, that's another issue all together.

[no_it_all]

If you need that expense to claim against your income in order to pass the means test, that's another issue all together.

Please explain how a car payment of say, $200 per month helps with passing the Means Test versus having no car payment at all. Have you ever actually completed a Means Test Calculation?

[bige1030]

Please explain how a car payment of say, $200 per month helps with passing the Means Test versus having no car payment at all. Have you ever actually completed a Means Test Calculation?

NB: I really think the last comment, as an ad hominem attack, is quite snide and is totally uncalled for.

[no_it_all]

In my local area you are allowed to claim up to $800 per month for ownership costs on form B22 for a filer with two cars (per line 22). That is a BK court freebie. Any outstanding payments on either of two cars are deducted from that freebie figure ( per Line 23 and 24). So, let's say you have two payments on these autos totaling $500. Once you deduct those payments, you get to put $300 down on form B22, instead of the $800 that I get to put down. Now, when you scoot over to line 42, you get to put down your car payments. I don't since in this example, I don't have payments. BUT you don't get to put down the $500 figure, instead you figure out how much you still owe the lenders and divide that number by 60. If you still have say, 40 months of payments (40x$500) you get to put down $333, NOT the $500. Why? because your total owned on these vehicles is 20K and you have to divide that by 60. Soooo, let's see where you are: You have reduced your monthly income by $300 on one line of form B22 and by $333 on another line, for a total of $633. I have reduced my income by $800...who is better off ??? AGAIN, the advice to go out and purchase a new car so the payment can be used in the Means Test Calculations is only suggested by people who do not understand how the calculations work. MUCH better advice would be to go out and purchase a junk car for a hundred dollars, title it and grab a tag so now you can claim TWO vehicles and get the full BK deduction....BTW the orignial poster on this thread has mentioned that their payment is about half of $370 AND they have been paying on it for awhile...not sure that will have any significant effect on their means test calculations.........Clearly you can cut and paste code, but did you ever fill out and file a Means Test Calculations worksheet?