New Here with Questions

[nojusticehere]

Thank you everyone for answering my questions. I do have another one. If I include the second car in the BK, the creditor will go after my son for payment. Can he continue the monthly payment or will he have to pay the entire balance? Since I have so much secured debt, does that mean I don't qualify for Ch7 if I meet the means test?

[keepmine]

A deficiency balance on an auto repo is unsecured debt.
If you include the other car in the bk, your son is on the hook for the monthly payment.
As to the furniture, the longer you wait on filing, the better chance of keeping it. It's already been 6 months so I doubt they'll want it back.
You really need to work through the schedules plus, get a few consultations with bk lawyers and see what options may be available.

[NoName]

Yes. Your debts would be combined and then divided into either 36 or 60 monthly payments.

[nojusticehere]

Ok, lets look at this. This is so confusing, lol. If the 1 car is repo'd before I file that is considered an unsecured debt? or just the deficiency?, and I have the other car included in the BK, the bank will say that my son will have to pay? Correct. Then by time I file the only othe secured debt would be the furniture (which they probably won't bother with because of the time line). If they do want it back, I'll just set it outside and they can pick it up. If it rains.....oh well. I've printed the means tests and am going to complete them over the next few days. Keep your fingers crossed. Thanks everyone, this really helps. I'm going to speak with my son about all this as soon as he can call (boot camp).

Also, since I plan to file, should I continue to make payments on all my debts. I'm not sure when I plan on filing, depends on the cost (but I'm sure it'll be within the next few months). Of course, I will continued to make the car payment on time, I don't want to ruin both of our credit.

[keepmine]

If you're several months behind, it'll be repoed sooner rather than later. If it hasn't been sold at auction by the time you file, your lawyer will list it as a contingent/unliqudated liability.
If you truely believe you will file, stop paying all debts that you wish to dis harge and use the money for liing expenses and your legal fees. Also, stop using those credit cards.

[HHM]

Ok, lets back up and summarize for a bit.

Car 1, you and son are co-debtors, payments are behind at least four months, and you are terribly upside, (i.e. loan principal far exceeds current market value of car)

Car 2, your car, current on payments and you intend to keep this car.

Son is away in the military

Misc Furniture debt, but you are current on payments

Misc. other debt, probably unsecured debt, correct?

(Please correct me if I have misstated any of those facts).

AND, you are well above the Median income for your state and household.

First Problem:
Repossession of Car 1 is imminent. If the finance company has been unable to reach you and you haven't worked out a deal with them by now, odds are the repo company has already been hired.

Second Problem: based on the information you supplied, the vast majority of you debt is secured debt. Thus, if you file any chapter of BK, and under the new law, you pretty much have to keep making payments, (or surrender the property)

Third Problem: Question...
Do you want to keep your son's car or not? You need to make this decision.

Options.
1. Contact the finance company and try to work out a plan to make-up the back payments. If you are upside down as much as you claim, they may be amenable to such a plan...but being 4 months behind is pushing it.

2. Let the car get repo'd. If you don't want the car, the car is going to eventually be repo'd. If you are upside down, the finance company can charge you with a deficiency balance, which IS a type of unsecured debt. (Think of it this way, they ALREADY have your car, there is no more security for the car loan). Possible drawbacks, if your son is "true" co-debtor on the car, his credit could be hit, and they could come after him for the deficiency balance. Your credit will take a hit, BUT, keep in mind, with the late payments, your credit is already on a downward path. If you do not make arrangements to pay the deficiency balance, eventually you will be sued, and judgment taken against for that balance, plus accumulated interest.

Option 3. File BK. Given that you are "well above" the median income for your state, you won't be able to file Chapter 7...plus, given that nearly all your debt is secured debt, chapter 7 would NOT help you. Thus, you would have to file chapter 13 and devote ALL your disposable income into the chapter 13 payment plan.

The NEW Bk law does not let you string out "future" secured loan payments over the life of the Chapter 13 plan. About the only thing a chapter 13 would accomplish for you is, it would allow you to KEEP your son's car and payback the 4 months of missed payments, BUT you would need to continue to make the regular monthly payments on both cars and the furniture. If you surrender the car in the chapter 13, there will still be a deficiency balance, and it will get classed as an unsecured debt AND, if you are well above the median income, I would presume you would have substantial disposable income and you would end up paying back the deficiency balance in full anyway.

Hence, my previous advice, I really don't think a BK solves your problem (it certainly won't make it worse). Also think of this, you will be paying some lawyer $2500-$4500 to do a chapter 13 to essentially repay a deficiency balance.

About all you can do, is schedule a few free consultations with BK attorney's in your area (THIS WEEK), and see what they have to say.

[nojusticehere]

HHM. Thank you. There is some changes that need to be made to your post. First of all, the car (Car #1) that is being repo'd is in my name only and is behind 4 months as of the 24th of this month. I am upside down on this car. My son has no liability with this car.

Car #2 is in both mine and my son's name. I purchased the car with his name on it so that he could develop some credit and is current. The registration is in both our names and we both signed the contract. I am the primary. As for keeping the car, I will do this so as not to ruin his credit if
that is what I need to do. On the other hand if I include it in the BK, then they will come after him for payment, in which I will make the payments and keep the car (make sense?)

I have been working on the means test, and so far, even though my income is above the median income for florida, after punching in all the allowables, I may be low enough to file 7. Haven't finished yet, will have to see.

As for the atty, I was not able to find one to see this week. Next week on Monday and Tues I have 3 appts.

If your above info has changed because of the difference in the Car #1 (mine/repo)and Car #2 mine and my sons surrent) please let me know. Any info is greatly appreciated.

[HHM]

That clarification does not really change my overall advice, the only thing that changes is that the risk to your son's credit is nil.

The problem is, even if your budget (means test) hits the allowables, your still over the median and that is tough to overcome. Keep in mind, ALL chapter 13 plans are 60 months unless you can pay 100% of your unsecured creditors in less time. So, for example, if the deficiency balance was $15,000, plus your attorneys fees and trustee cut, the trustee would only need squeeze out of your budget about $320-$340 per month to satisfy the deficiency balance in full.

If you are over the median, the trustee can probably do that by objecting to some of your claimed expenses.

[nojusticehere]

Thank you HHM. You have shed some light for me. Lets see what the atty has to say, keep your fingers crossed for me and I'll keep everyone up to date. Thanks again!!

[HenriettaHen]

Nojustice, it seems like you're in the pre-bankruptcy spiral - and you might be able to pull out of it. It may pinch a bit, but bankruptcy pinches a LOT. If you don't really, really need to file bankruptcy, then save yourself the pain and agony !

I missed the part about most of your debt being secured by autos.

How could you free up some of your money so that you could stop using the credit cards? Because that's what you're aiming for, bankruptcy or not.

You probably have a high car payment and vehicle insurance, etc. on Vehicle 1, (the loan that is $4K in arrears) ..... so by letting this car go, you would be freeing up quite a bit of income - even if you do owe a deficiency balance.

Do you know if you would owe that in one lump? Or could you make payments?

Have you been in contact with this lender about your situation? It would make you feel better knowing what is actually happening about the repo. You've accepted the fact that you are going to lose this car, so make that call and find out where they're at with this, if you haven't already.

Okay, so V2 is current, but costing you a bundle. You are shouldering this burden alone - to help your son and to have a car.

How's about if Son pays half the car costs? That would seem fair, and would be a good deal for him. And would free up some cash in your budget.

The two car loans and the other associated vehicle costs are eating you alive, from the sounds of it. You're only one person and can only drive one car.

The way things are going in today's economy, it is getting harder and harder to afford a new car - couldn't you and your son share the costs in order for this arrangement to work better for both of you ? The truth is you really can't afford Vehicle 2 by yourself.

If you make a course correction here with your expenses, things might ease up a bit.

[nojusticehere]

Henrietta thanks for the thoughts, and believe me I thought of them also. Here's the situation with my son. He enlisted in the military (Navy) and is in boot camp right now, from there he'll go to Tech school and they don't/won't allow him a vehicle while there (from my understanding). He'll be there for a year. Then after that he'll be on a ship. If he makes the payments then he should have the car, and I don't have a problem with that, but of course he won't need one for a while. So having him make the payment, although would be great, isn't exactly right if he doesn't have the car.

As for the other car being repo'd. I received a letter a week ago demanding that I make up the deficiency or they would take action within 10 days from the date of the letter. The date on the letter was 11 July. We are now past that so....

So I can better explain my finances, I will break down my situation:

Bring home pay (monthly) 3200
Rent/elect/water/cable - 1400 approx
Cell/internet - 135
Car payment/insur (current vehicle) - 500
Car payment/insur (one being repo'd) - 800 (deficient 4000), upside down by$15000
Cred Card - 300 (mins payment) all current

This does not include grocery or fuel for the month. I have $65 left after paying everything. So even if my son pays the 500 per month, I will still have to pay the deficient balance on the vehicle and I won't have a vehicle to drive since my son will have it.

I am weighing both scenarios and will make my decision after speaking with the atty's next week. Thanks for your input, any other ideas would be great!

[JollyGG]

Okay. Here are some thoughts on your situation.
What if you
1. let the first car go into reposession and work out a payment plan with the creditor for any deficiency?
2. Sell vehicle number two and buy something cheaper. (Perferably something you can buy outright for a couple thousand dollars, then you don't have a monthly payment and you can get away with only liability insurance)
3. Look around for a smaller place to rent. Son is gone so you really don't need as much space.
I see the $300 minimum payments on your cards. How much total do you owe in cc debt?

[BKTango]

Honestly I do not think filing bankruptcy will help you much. The amount of money you free up surrendering the one car will only go towards funding the chapter 13 plan. So you will still be near where you are at currently only without any credit cards to use for buying your groceries and such. The only other thing that could happen is the bulk of that freed money is used on living expenses(the groceries, gas and toehr expenses you didn't calculate in), but that presents the problem of if you will even have enough money to fund a chapter 13 plan.

The one thing you could look into is if your gross income, before taxes is barely above the median. You may be able to slide into a chapter 7. It may be a long shot but judging by your take home you are barely above, but it goes by gross not net. The 300 and 800 dollars a month that would be freed up would pay your groceries, gas, and other living expenses. But again, that would depend alot on what your actual living expenses are total, for everything.

The best thing you could do is gather up all of your bills and figures. Set up a few free consultations with some bankruptcy attornies in your area.

Other than that the only advice I can offer is the son needs to learn how to build credit on his own, later if necessary and you need to get rid of both vehicles, work out a plan if necessary to pay the deficiency, and either use public transportation if possible or find a used vehicle with very low monthly payments. Both of those vehicle costs are putting a serious dent in your finances.

[HenriettaHen]

You've definitely got a problem with this defaulted car loan on V1, I wonder if you still could patch things up there?

It's messing things up for you, because your CC interest rates will go up eventually as a result of a default/Repo/Deficiency, and it is affecting your credit rating very negatively. This is the spiral part.

Because your expenses are too high, you're only one minor disaster away from getting into the same scenario with V2, right?

I feel your horror of the possibility of all this messing up Son's credit - so think creatively. Maybe this is not the right time for him to be listed on your loan, because in helping him, you are making it quite difficult for yourself. Your financial condition is fragile, so the likelihood of this backfiring on him is quite high ... this must be worrying you No END! If you explained this to Son, I am sure he would understand. Sometimes we bite off more than we can chew because we love someone - that's not such a terrible sin.

So take one small step for womankind. While you are still current, find out how to take his name off the current car loan, with the explanation that he has joined the military and has no further interest in the vehicle. Okay, now you owe this all by yourself, and whatever happens with V2 or BK or whatever won't affect him at all. (Hey, who knows what Son might suggest in the way of a solution?)

Then maybe you could find a good used car for much less money and get out from under these car payments - they're killin' ya! Most places have an extended warranty, and they'll build that right in.

I hope that the default/repo problem with V1 won't cause a hassle, but it might. You've just got to plead with lenders sometimes to help you out, based on your true circumstances. You've let this go a long time, so admit that and move forward - you might have to take a hit for it, but this is your warning signal from the great Money God - trim expenses immediately!

If this were my sticky wicket, I think I'd get me a Turbo iced-coffee, and call the lender. Hey, you'll probably start crying, so get the tissue ready. Don't worry about it - you're talking SURVIVAL HERE.

See what is the least expensive way to get out of this V1 mess - maybe a voluntary surrender would be better than a repo ? ASK.

Just more cackling from HH. Hang in there.

[nojusticehere]

You make me laugh with the "cackling". I had already called the the lender about removing my son from the loan, they said "no", said the loan was too new, or some kind of bable like that, prior to him leaving. My interest rates on the CC have already hit the 29-30% rate due to Car #1. And my credit rating has dropped from a 720 to a low of 514 without the BK.

I just got off the phone with the in house collections on veh 1. This is what they said, Unless I pay the deficiency in full now plus the present amount due, the car is do to be repo'd, they have already made arrangements. I explained to them that I don't have that kind of money and asked if they would allow me to extend my payments or increase them to make up what I'm behind. They said no. I then tried to explain to them my circumstances. They are playing hard ball and don't want to hear what I have to say. I even tried to explain that perhaps "they" would be better off by allowing me to make it up in payments since the car is upside down and they will lose out otherwise. Again, no luck. So I'm stuck with the repo on this one. Once this happens, I guess I would need to wait until the sale of the car? correct? in order to include the deficiency as an unsecured debt???? if I file BK. right?

As far as talking it over with my son, because he's in boot camp I'm unable to speak with him unless he's able to call. He's been gone since Jun 13 and I've only spoke with him 2 times. I will see him the middle of Aug for his graduation, but until then I must make these decisions on my own and hope they don't affect him. You are right, we sometimes do things for our family that we normally wouldn't do, and they end of biting us in the butt. But I made these decisions on my own, I can only accept full responsibility. No one held a gun to my head. My financial problems actually started a couple of years ago. I've been trying really hard to get things paid off and done. This year alone I've been able to pay off and close 9 accounts. And I really don't want to burden him right now with all this. He's got enough on his plate at this time.

I'm trying not to allow all this to stress me out, you know ,take the "what's gonna happen is gonna happen" attitude, but I can tell it's affecting me in other areas. I can only do what I can do. Maybe I can hit the Florida Lottery or something, ooooooooo wouldn't that be nice!!! Thanks again. Still gonna wait and see what the atty says.