Buy a car before or after filing ch 7?

[mamajenn]

My husband and I have about $27k in unsecured cc debt and another $30k in student loans. The $27k is the result of my medical expenses. We do not own our home but we do own my car outright ('99 Volvo S70 worth about $4.5k) We've been trying for years to dig ourselves out while still paying my current medical expenses, even signing up with Care One Credit Counseling service who reduced our interest rates, but we still can't afford any of the $775 monthly payment they require. We haven't missed a payment to any of our creditors yet, but when I get done typing this I'm going to call Care One and have them stop the automatic withdrawal for next month. Our situation came to a head this month when we had to ask my husband's family for help when our dog got a massive infection, the tires blew out on my car, and our organic mattress got ruined when a 8x12 hole in our roof formed during one of our recent CA rain storms. Suffice it to say, the past few months have been more than trying. We've finally realized that filing for bankruptcy is our only way out. The really good news is that I am finally getting better and we are expecting our second child in early June. Our problem, though, is that I can't fit another carseat in my car, so we've got to buy a different car before the baby comes. My question for you is: Should we sell my car immediately and buy something now because we still have good credit or will it just get repossessed in the bankruptcy proceedings? I'm worried that if we wait until our case closes the baby will be born first, then I'll be stuck in rural California with no way to leave my home. What should we do?

[keepmine]

Get your transportation needs taken care of before you file.
Just be sure the amount of equity in the new ride is below what your state exempts .

[nerves]

You will also want to consider your timing with filing. If there is even a minor hiccup with the birth of your child, it can be costly. You may want to think about waiting until after the baby is born to file. Congratulations on your bun in the oven

[mamajenn]

How do I find out what CA's exemptions are? Also, we have to stop making payments to our creditors now. Can we really wait to file until July?

[nerves]

You can stop paying your creditors now. Your phone will just ring nonstop. Caller ID does wonders! If you answer any of the calls, just verify who you are and do not give out any information as they will try to use it against you. Go to the Collections link - there is a ton of great information and some humorous stories to lift your spirits. I think there is a sticky that has a link to the exemptions in either the General BK or Chapter 7 link. You can also google CA bankruptcy exemptions and several sites will come up.

[mamajenn]

I just googled "CA bankruptcy exemptions" and read that CA only allows $2700 in a vehicle. Does that mean that not only can I not get a different car before I file, but they might even take the one I have that's worth approx $4500?? What am I going to do??

[nerves]

You can't have more than the exempt equity - anything above the trustee may offer you the option to pay the difference or make an offer. Sometimes they don't do anything. This is where having a few free consults with bk lawyers will come in helpful. If you haven't visited with any lawyers, I recommend setting up meetings with at least a few. Have a list of questions ready so they are worth your time. These meetings will be very beneficial and will help you create a bk plan.

[keepinitreal]

I just googled "CA bankruptcy exemptions" and read that CA only allows $2700 in a vehicle. Does that mean that not only can I not get a different car before I file, but they might even take the one I have that's worth approx $4500?? What am I going to do??

If you trade in your current car for a larger car that can handle your new addition, then you should be ok. Your new car will depreciate when you drive it off the lot and you'll probably have less than $2700 equity in it.

[geoffois]

I read a a couple articles that stated it is good to have "friendly" creditors when it comes to non-exempt assets. So for example if someone borrowed $6k from a friend against their car that is work $8500, then the car is already below the amount they can seize. You have to have "received" the money at whatever point the loan was made in the past. It probably wouldn't hurt to have it in writting. Someone told me it just needs to be in the schedule when filing for bk. Or if you bought a new car and put very little down payment then you would have no equity since the car would depreciate right away. Not sure, but maybe leasing would be good too since it would be an expense, but not really an asset.