Schedule J and worried about loosing car

[jdcat]

Hello to all. I printed out a schedule J tonight so that I would have something to show my hubby when I presented him with the idea of bk. I wanted him to see the actual numbers. I wound up with a -$200 a month which does not include what we pay in cc's each month.

I got to thinking though that being in the negative may not be such a good thing in some cases? In a chapter 7 can the trustee force the filer to give up a vehicle the filer wants to reaffirm because keeping the car would be a hardship? Our car will be paid off in June 2010. We can't file until March 2010. I'm wondering if the trustee will take into consideration the fact that the car would be paid off soon after discharge and therefore we would then have another $400 a month to live off.

On the flip side I'm worried that the trustee might eyeball this car for liquidation, but I'm fairly certain we can protect it with the wildcard exemption for Indiana. I need this car to get to work and get the kids to school, I cannot loose it.

Does anyone know if people can be forced to surrender vehicles in chapter 7 because keeping the vehicle would be a financial strain?

Thanks for reading.

[BKParalegal]

For a reaffirmation agreement to be appproved by the court, you have to show that you can afford the payments and that is done easiest by having a positive income on Schedule J. First, I have to believe, you can reduce your food, utility, recreation, charity etc. etc. amounts enough to at least show $1.00 in the black. If you can't, the trustee has nothing to do with denying your reaff, it would be the judge that would have to approve it, if you are still in the negative, but in reality, even if you didn't get it approved, I doubt the finance company would repo it, being so close to the payoff date. Only Chrysler and Ford, generally repo real quick, the rest never do or wait until you are behind in payments again.

Good Luck

[UpsideDownMI]

If you are planning on filing a chapter 7, you will want your disposable income to be as negative as possible so that the trustee as a lessor chance of pushing you into a chapter 13. The trustee will realize that your car will be paid off soon after filing and could argue that you will have more disposable income, which could push you into a chapter 13.

Just because you are in the negative does not mean that you will have to give up your car. In my district, if your reaffirmation agreement is denied by the judge due to negative disposable income, you will be allowed to keep your car as long as you pay on it (ride through). Also, in my district if an attorney signs off on the reaffirmation agreement, the judge will automatically approve.

[jdcat]

Thanks for the replies. I really appreciate the info. I guess an attorney would know best how to handle this situation as far as the numbers go. I think it odd though that numbers can be adjusted in order to paint a certain picture. How do the courts know truth from fiction?

[keepmine]

If you are planning on filing a chapter 7, you will want your disposable income to be as negative as possible so that the trustee as a lessor chance of pushing you into a chapter 13. The trustee will realize that your car will be paid off soon after filing and could argue that you will have more disposable income, which could push you into a chapter 13.

Just because you are in the negative does not mean that you will have to give up your car. In my district, if your reaffirmation agreement is denied by the judge due to negative disposable income, you will be allowed to keep your car as long as you pay on it (ride through). Also, in my district if an attorney signs off on the reaffirmation agreement, the judge will automatically approve.

Agreed! There is quite a lot of caselaw that says all a debor is required to do is, offer to reaffirm. The code does not say the reaffirmation must be approved.

[novayalife]

I was negative and still approved for reaffirmation on the car. I dont think in most cases the judge cares either. As long as you work it out with the finance company.

[Tbornetun]

If you are filing in March and it will be paid off in June, the vehicle would be paid in full before discharge anyway.

No need for a reaff. It would be pointless.

Just make sure you keep those payments up and you will be fine.

[jdcat]

Thanks nova and tborn. I had a phone consult with an attorney yesterday and he said around here the trustees won't look at a car that's 5 years old. Then he went on to say that my car wouldn't go for enough at auction, not enough to interest the trustees anyway.

Just 8 more payments to go and for the first time in my life I'll *own* a vehicle and have no car payments. Then I'll drive this puppy till it's literally falling apart, lol! Maybe I'll get lucky and get a good ten years or so out of it.

[jdcat]

I've been doing a lot of figuring with our expenses and everything and am still coming up with a negative DMI. Even when lowering some expenses I come up with -$150 per month. I am wondering now if a chapter 7 is realistically possible for us because our car will paid off in June. When it's paid off our DMI will be around $200 per month. I can't imagine a trustee just letting that pass.

[keepmine]

I've been doing a lot of figuring with our expenses and everything and am still coming up with a negative DMI. Even when lowering some expenses I come up with -$150 per month. I am wondering now if a chapter 7 is realistically possible for us because our car will paid off in June. When it's paid off our DMI will be around $200 per month. I can't imagine a trustee just letting that pass.

Talk to your lawyer. I'm sure you can massage some numbers here and there to get the MDI down a little.
Just a couple of suggestions-do you and your spouse have both long and shortterm disablity insurance? Also, prehaps start making $50/month contributions to a church or charity-just to get a track record started before you file.

[jdcat]

Hi keepmine,

No, we don't have disability insurance. I actually had never considered it before. Thanks for the idea. We used to give to United Way weekly from my husbands paychecks. So we actually do have a track record with charity, it's just been a few years since we last donated. I had not thought of that at all. Thank you!