Selling and trading in cars

[ssmdem]

We've got four vehicles which are going to put us over the allowed exemption amount. If we sell two - and document that all $ are used on living expenses (we still owe some pretty hefty medical bills), and then trade in one towards a newer vehicle - are we doing everything right? Just don't want trouble down the road. We don't intend on filing until August or September - just trying to get all my ducks in a row now.

The one that we're trading in is worth on KBB $4000. It has some fixable but pretty significant body damage on it, so selling it through a private party sell is most likely not happening without us getting the body damage repaired. I doubt a dealership is going to give us anything near that amount for the trade-in either. So is this going to look off to a trustee?

[StartingOver08]

You are allowed to sell your stuff before filing as long as its for "fair market value". The body damage will affect the sales price naturally. If it were me I would document the transaction anyway including photos just in case the TT asks you about the transactions. You are doing the right thing - this is what planning your BK is all about!

[spetkovich]

You mention using the proceeds of the vehicle to pay off some hefty medical bills. Be careful! Using the proceeds of the vehicle sale to pay off a creditor (even a medical bill creditor) could constitute an avoidable transfer once you file.

[ssmdem]

You mention using the proceeds of the vehicle to pay off some hefty medical bills. Be careful! Using the proceeds of the vehicle sale to pay off a creditor (even a medical bill creditor) could constitute an avoidable transfer once you file.

Well, it's orthodontics bills. One of them is already set up to be taken out in increments each month (it comes out through OrthoBanc -not the doctor) so I can see where that one wouldn't look right. The other one is a brand new bill that I haven't started making payments on at all. I would pay it directly to the doctor. Couldn't I just automatically pay all of the second one with no issues? My mother has been paying it for me prior to now -- again, being deducted from her account through OrthoBanc. I guess I could just get them to start taking that payment from my account instead of hers. I'd like to pay the bill myself - but I know I can't reimburse my mom for it as that's going to draw attention to it. Maybe the safest thing is just to start having both payments come from my own account and not worry about paying it all off. There's plenty more things we've put off, other dental visits, scrimped on groceries, etc that I know we'll have no problem eating up a good portion of the proceeds.

[ssmdem]

You are allowed to sell your stuff before filing as long as its for "fair market value". The body damage will affect the sales price naturally. If it were me I would document the transaction anyway including photos just in case the TT asks you about the transactions. You are doing the right thing - this is what planning your BK is all about!

Is it okay to trade it in towards a new vehicle - or should I try to sell it outright?

[StartingOver08]

You can trade it in too. Do what is best for you financially (sale/trade). All the TT wants to see is the actual transaction (bill of sale/new purchase contract etc). They just want to make sure you are not selling something for a nominal amount to family or friends to hold for you until after your discharge!

[LadyInTheRed]

If you are definitely filing, stop paying the orthontic and medical bills, unless you need to pay them to continue getting care.

[ssmdem]

If you are definitely filing, stop paying the orthontic and medical bills, unless you need to pay them to continue getting care.

Oh yeh - definitely need to pay them -- otherwise they won't take the braces off. My kids would hate me forever!

[ssmdem]

You can trade it in too. Do what is best for you financially (sale/trade). All the TT wants to see is the actual transaction (bill of sale/new purchase contract etc). They just want to make sure you are not selling something for a nominal amount to family or friends to hold for you until after your discharge!

Well, financially it would be better to sell it outright as I know we'll get less for a trade-in, but with the body damage, I'd just rather trade it in to Honda and be done with it. My husband is going to take it by a body shop tomorrow and get them to give us an estimate in writing, so we'll have that to document how much damage was on the vehicle before we sold it, along with the pictures.

[SMinGA]

Sounds like the medical you're referring to is for ongoing treatment - which is not the same as paying existing unsecured debt. That should not be an issue.

Selling/trading in the vehicles also should be fine. Avoid selling to friends/family UNLESS you heavily document the value & condition of the vehicle to show you're getting a fair price.

[ssmdem]

Well, car #1 sold -- KBB shows it valued at $1170, we sold it for $1100 (crack in the windshield, some interior damage - all of which we took pictures of). I've got a signed bill of sale from the buyer. Heading to the grocery store today, a trip I'm VERY long overdue for, filling up the gas tanks in our other vehicles as well as paying for a repair that one vehicle needs, paying my son's $125 orthodontic bill when I take him in for treatment on Monday, paying the water bill and the gas bill - keeping receipts - and I'm pretty sure that will blow through most of it. I think doing all this right is stressing me more than anything!!

My biggest worry right now (and my attorney has assured me that it isn't a problem) is the fact that we're still listed on my parents' checking account - we deposit nothing, we write no checks - just there for security reasons if something should happen to one of them. I'd feel so much better if we could have them close that account.

[ssmdem]

Well - scratch that repair on the other vehicle - my husband just got back from the body shop who gave him a grand total of $2600 to repair it. Not happening!! The van is only worth $5000. So guess we'll trade it in or sell it as in and keep the estimate as prove why we didn't get full value for it. Seems so backward to be looking at getting another car when we're already in such a financial mess - but I do understand the reasoning behind it. I can just hear my dad now though when we sit them down and tell them about what's going on. "Well, WTH did you just buy a new car?!?" UGH!! At 42, my dad's comments just shouldn't bother me anymore, but they still do. But guess that's a whole other story.