chapter 13 filed, but wish to retain vehicle with large payment

[chloe0724]

The Trustee has the right to challenge any expense you have, even if it's secured.

[bcvw]

If his job is to be on the side of the creditor, then what point would be made of forcing the filer to give up a secured asset IF he can afford it? If the car were to be given up, it seems the secured creditor would LOSE money and the unsecured creditors would get more.

[Minnymouth]

The bankruptcy laws have a "set limit" on how much the value of your vehicle can be and how high your payment will be allowed while you are in Chapter 13.

Most Trustees follow these guidelines to the letter..... so if you own a Porche (can't spell) you will most likely be loosing it in bankruptcy. The Trustee cares nothing about "your love for your car".......

The objective of the Trustee is to take what extra income you have for up to 5 years and get your creditors paid back as much as he can. He is not going to let you keep a "luxury" vehicle, and your creditors take the loss.

You didn't say if you have any equity in the auto or not? Is it new, a couple of years old with equity? Or upside down on it also, like the house?

Filing bankruptcy gives you the opportunity to "start over"...... but it's not designed to eliminate "just WHAT YOU WANT TOO" and keep what you want too. When filing bankruptcy the court allows you to keep your assets if you can meet certain guidelines.

If your Chapter 13 calls for 100% payback and you can still afford your "little car", then there's no reason why the Trustee wouldn't let you keep it. But the Trustee has to approve your payment plan!! If your Trustee feels that you can't meet the plan, then he's not going to approve it!!

Your at the mercy of the bankruptcy court unless your case is dismissed by the courts. Then you are back to square one..... with all your creditors coming at you in "full force".

Remember a Trustee is not going to let your keep a luxury item and a creditor due without getting paid back at 100%. That would include all of them secured and unsecured.

Bankruptcy is a business decision just as buying a vehicle is a business decision. Sometimes you have to "do what you have to do" to survive and let go of the material things in your life.

Nobody likes to give up their "homes" either, but in bankruptcy they are sold everyday..... especially when folks can't afford them or are upside down on them....

Listen to your attorney, get the advice of another to see if he tells you the same things.

Keep us posted what you decide.......

[justbroke]

Yes, pay attention to what Minnymouth just posted. The Trustee is a representative of the creditors. If the Trustee thinks your plan is in bad faith, s/he will go after you through the BK court! I asked earlier how much you were paying to unsecured creditors through your plan. This is very important as to how the Trustee will treat you!

Generally, under 70%, the Trustee is looking for pennies. With a 100% payment plan to unsecured creditors, they don't care what you do with your disposable income. However, in a less than 100% plan (and more so in a plan paying less than 70%) if you can afford to change your lifestyle to keep the expensive car, regardless of the IRS limits, then you can afford to pay the unsecured creditors a higher percentage. See the logic?

(I had chopped off a lot of my posting so that it didn't become a discussion on Bad Faith plans, but form what I've read, it seems you're probably below 70% payback and your lawyer knows the Trustee and that they'll attack a plan with an expensive car in it.)

Edited to Add: Here's a practice pointer from one of the districts...

IMPORTANT PRACTICE POINTER: The closer your plan is to 36
months, and the lower the percent to unsecured creditors, the more
scrutiny your plan and your Schedule J Expenses will receive from the
Judge, the Chapter 13 Trustee (and possibly unsecured creditors). It
should go without saying that if you can get your plan to at least 70
percent, the Judge probably won’t be reviewing your plan for
confirmation

[Flamingo]

The Legal world and bankruptcy is emotionless. It is just a vehicle. It comes down to how much the Trustee can get for the creditors and give you a Plan you can successfully complete. You also need to look at things differently because as you, when my husband lost a six figure income and our household income dropped 70% due to that, we had to learn an entirely different lifestyle in order to complete our Plan and get back on our feet. There will always be luxury cars available and if you can't keep this one, don't worry about it. I get the feeling you will have a tough time adjusting to life in Chapter 13 and you will need to learn you will have to do without a lot of things, stay home and buy discount. It is all worth it in the end. The lifestyle change Chapter 13 brings is the hardest; it is the main reason Chapter 13 plans fail.

During our Plan years, I always stated to myself and my husband - "Remember, nothing is leaving the planet."

[bcvw]

To clarify my position on this, I assumed that he was at 100% payback as I am likely to be. Looking back, he doesn't say what percentage he is scheduled for, but his income is high.

I took a leap and compared Wheel with my situation in which I would be at 100% and could still pay in for a car payment of that magnitude.

Good points everyone, thanks for the info!

[Minnymouth]

When filing bankruptcy (especially a Chapter 13 - done to keep most of your assets) the Trustee will control your financial affairs for the next 36-60 months. Any extra income you receive will be his for the "taking", any windfalls or inheritances are at his disposale.

Your lifestyle will change drastically and you will have a lot of adjusting to do especially if you went from a high income family to a "big loss" in income!!

The Trustee will decide on how much money you will be allowed to live on, and the Court will approve or disapprove the final figures.

Remember the Trustee is going to be a part of your life and finances for the next 3-5 years in a Chapter 13, so PLAN ON IT!!!

Bankruptcy is no "walk in the park" for most and some its devistating to the way of life they are used to living.

But in the end....... it is well worth the effort and you look at your finances in a whole new way....

Just a thought......

[justbroke]

If his job is to be on the side of the creditor, then what point would be made of forcing the filer to give up a secured asset IF he can afford it? If the car were to be given up, it seems the secured creditor would LOSE money and the unsecured creditors would get more.

I had to go back to this post, because this is a very telling post of how we, the Debtors, think.

The Trustee thinks differently! He is trying to get the most money for all of the creditors, priority aside!!! Let's take the case in hand for an example.

The car has a debt of $30K owed on it, and is worth $30K. The $725/month is the kicker. If he surrenders the car, the Secured creditor will not be out any money (since he states that it's worth the same as the balance on the Installment Agreement). Now, that's $725 - $489 (or $236) more per month he can apply to the unsecured creditors!!! (And that's a good amount of money over 60 months... about $14K.)

Now that's thinking like a Trustee. Some unsecured creditors, with high balances will come after your plan too for that reason! Remember, that's if the plan is less than a 100% plan with the most scrutiny on plans less than 70% to unsecured creditors. I also learned something else interesting the other day. Many of these creditors will consolidate and sell the BK portfolio to another company for pennies on the dollar. The new creditor (Claimant) will try to collect as much as they can, as everything above what they paid for the debt (no more than $.40 on the dollar) is pure profit! I read one case where the Debtor tried to pay the new creditor what they paid for the account. The judge didn't buy it and said that they took the risk that it would be uncollectable to begin with!!!

We have to realize, as Debtors, that the Trustees and even some shrewd creditors, think totally different than we do! Sure, you can fight the Objection of the Trustee to your plan in an evidentiary hearing and may even go to an adversary proceeding, but that costs money, and these Trustees have been doing this for years (many of them become BK judges!!!). On the other hand, some Trustees have overstepped their power and have been spanked by the court.

(Am I talking too much? I get wordy sometimes. Maybe this is too much information for this thread.)