Auto loans and means test question

[limegreen260]

Sorry if this has been addressed before.

On the means test (we are over median) do they calculate your monthly auto payments over 5 years? For example, we have a 3 year loan on my car, the payment is $319/month with a balance of $10,900. Will they calculate this as $181.67/month for 5 years in order to determine if we can afford a Ch. 13?

[Naomi]

I hadn't thought of this.
Our car situation is about the same so I'm glad you asked.

[albacore44]

I hadn't thought of this.
Our car situation is about the same so I'm glad you asked.

It's calculated like this (balance owed/60 months = monthly payment allowed)

[Naomi]

Thanks.
That makes sense.

[limegreen260]

It's calculated like this (balance owed/60 months = monthly payment allowed)

So, if we do a 13 they'll renegotiate our auto loans to make them 60 month loans?

And by doing so increase our disposable income for the 13?

[albacore44]

So, if we do a 13 they'll renegotiate our auto loans to make them 60 month loans?

And by doing so increase our disposable income for the 13?

no. for the purposes of the means test/expenses, you only get to deduct the amount calculated by using the formula.

[Tbornetun]

But don't forget to add the interest you would pay on the balance into the formula as well.

[limegreen260]

no. for the purposes of the means test/expenses, you only get to deduct the amount calculated by using the formula.

And they use that to determine disposable income?

Auto #1 Balance $10,900/60= 181.67
Auto #2 Balance $11,400/60= 190.00

So $371.67 is all that I can put on my expense sheet?

Sorry, I'm confused. Thank you for your help.

[albacore44]

And they use that to determine disposable income?

Auto #1 Balance $10,900/60= 181.67
Auto #2 Balance $11,400/60= 190.00

So $371.67 is all that I can put on my expense sheet?

Sorry, I'm confused. Thank you for your help.

yes. as long as the interest is included in your balance.

[limegreen260]

yes. as long as the interest is included in your balance.

What about the fact that our payments are actually $714/month?

What happens when they determine we have an extra $342 a month to pay towards our debt then we end up unable to make our car payments?

[albacore44]

What about the fact that our payments are actually $714/month?

What happens when they determine we have an extra $342 a month to pay towards our debt then we end up unable to make our car payments?

Alright......again, here is how it works. It is not based on what your actual payment is today, but your total balance including interest amortized over 60 months. The trustee would not let you get away with claiming a $714 payment for 1 car.

My payment is $590 a month. but by the time i file it will work out to under the maximum allowed per the IRS guidelines due to remaining balance amortized over 60 months. If you think your headed for Ch-13, and your fairly close to paying off cars, I would either refinance what you have for the longest term you can get, or buy another car and keep the payment under the IRS guidelines.

[limegreen260]

Alright......again, here is how it works. It is not based on what your actual payment is today, but your total balance including interest amortized over 60 months. The trustee would not let you get away with claiming a $714 payment for 1 car.

My payment is $590 a month. but by the time i file it will work out to under the maximum allowed per the IRS guidelines due to remaining balance amortized over 60 months. If you think your headed for Ch-13, and your fairly close to paying off cars, I would either refinance what you have for the longest term you can get, or buy another car and keep the payment under the IRS guidelines.

That's for two cars. Two drivers.