Car Questions

[filingin08]

DH and I will be filing 13 soon. DH had a BMW lease up in Dec. Per lawyer's advice, we are returning it and buying a family friendly vehicle. Lawyer is out of town now and we have two questions hoping someone here has some advice.

1) What do you think the courts will view as reasonable? Does it matter what our car payment ultimately ends up being?

2) I have a VW. Couple years old, having problems. Should we trade this now too since we will be stuck with it for 5 years? Will trustee disallow? Can they even disallow a car payment for any reason?

Thanks!

[rrockinggramma]

yes. The most important thing you can do for yourself is have reliable vehicles that will last the next 5 years. I would definitely dump the VW and get something else and purchase, no lease. Leases are headaches while in a chapter 13

[filingin08]

What do BK courts look at when looking at a car payment?

We're considering a van and a honda something. Should we buy new or almost new?

Our biggest concern is getting locked into two car payments and the trustee - or whoever - saying "nope, can't do" or it being considered bad faith, etc. If we managed to keep payments close to what they are now, would that make a difference? Given our credit though, we imagine payments will be higher.

[FreshLikeADaisy]

...Should we buy new or almost new?

Almost new, without a doubt. Since you will be purchasing, and financing the cars for very close to their value (in other words, no equity), it becomes an investment, and letting someone else pay the first year depreciation is very wise. Now, you don't want to buy *too* used, because at a certain point you'll start having to be careful of Katrina vehicles, etc. But *buy not lease, finance close to 100%, and almost brand spanking new* is the way to go.

Also, keep in mind that what the trustee is looking for is *luxury*. The Beemer would have gotten you into a lot more trouble than a family car and minivan. If you're asked, tell him straight up: "The lease ended, the other car was having problems, and we knew we needed to get something that would see us through the five years of Ch13." Nothing wrong with that at all. Many people have done what you're thinking about doing and it's sane advice. I think I've even read here where people's attorney's were telling them to do this before they filed.

Good luck!

[filingin08]

Thanks! Our attorney responded and said exactly what you did! Buy a reasonable car and van, keep payments around same range, and be ready to explain to the trustee why we did what we did. In her opinion, it shouldn't be difficult to justify. Car shopping this weekend times two. Yuck. Glad it's year end and dealers are very motivated!