buying a car for my son

[Geo]

I live in Missouri and have been unemployed for ten months. I'm doing everything I can to avoid having to declare bankruptcy, but am trying to educate myself about the bankruptcy process in case it comes to that. My question is about buying my son a car. My ex-wife is contributing some money, but most of it will come from what I saved from my 2010 tax refund and from cashing in some savings bonds. If I do end up filing for bankruptcy at some point next year will this cause any problems? If the car is in his name can they still take it? I drive an old clunker which is only worth about $1,000, leaving about $2,000 in the vehicle exemption, but my son's car will be more than that so part of it will not be exempt. Will cashing the bonds and using my tax refund for the car cause me any problems? Thanks. This forum has been a huge help in trying to make sense of this whole process.

[justbroke]

How old is your son? Is the issue that you can't title it in his name? I assume that you will pay entirely in cash. If it's in his name, then you still need to be careful with transferring an asset (cash) to him too close to the bankruptcy. You will need to ask Missouri DMV if they allow title solely in a minor's name or a joint tenancy with an adult. If it's joint tenancy, you still need to be very careful how the car is titled!

This is the type of thing I always defer to competent asset protection attorney in your State practicing in your local bankruptcy courts. The title will mean EVERYTHING in the bankruptcy.

[Geo]

My son is seventeen but will be eighteen in November. The vehicle can be titled in his name, and we will be paying in cash. If I wait until a year after the car purchase to file for bk does that take care of the asset transfer issue?

[LadyInTheRed]

Since your son is an insider, you would have to wait 2 years.

If you are unemployed and on the verge of bankruptcy, why would you contribute to the purchase of the car? That certainly isn't doing everything you can to avoid bankruptcy. It won't hurt the kid to drive a cheap used car and raise money to add to his mother's contribution.

[Geo]

I am not "on the verge" of bankruptcy. If I remain unemployed into the next year then I may have to consider whether bk is necessary. I am living within my means and have under $4,000 of debt as of now. The fact remains that logistically we can not get by on one unreliable car which has over 170,000 miles on it and is in need of repairs. My ex-wife is on disability and the amount she can contribute is limited. My son works and has been saving towards getting a car. Past experience with my oldest son has proven that it is counterproductive to buy a cheap used car which will end up needing lots of repairs and becoming a money pit. Been there done that. My youngest son goes to school and works, and hopefully I will be working soon, and it's impossible to get by with one car. The money for my son's car was set aside specifically for that use while I was employed, so it's not like I'm taking food off the table or running up debt to get the car. I'm being as responsible as I can, and with all due respect, I don't appreciate you insinuating that I'm being frivolous or careless with my finances. I've been a single parent raising two sons by myself for over ten years, and I wouldn't have made it this far if I was irresponsible with my money. I appreciate your reply and I apologize if I came across as being rude.

[keepmine]

I am living within my means and have under $4,000 of debt as of now

$4K isn't even worth contemplating bk-particularly if you have a cash stash to tide you over.
I'd agree with Ladyinthered. As the main potential breadwinner, you're the one who needs reliable transportation-not your 17 Y/O. If anybody gets a new car, it should be you.
I learned long ago that the absolute best way to help others is first, have the ability to help yourself. Focus on getting yourself back to work and let the kid drive the clunker. Once you get your finances stablized then, help out with a new ride.
Looking at your other post about consulting with a bk lawyer and then running up additional debt-it's just a bad plan. You're wiping out your cash to assist someone and then relying on cc's to get by. Your bk may well be a selffulling prophecy and totally unnecessary.

[LadyInTheRed]

The money for my son's car was set aside specifically for that use while I was employed, so it's not like I'm taking food off the table or running up debt to get the car. I'm being as responsible as I can, and with all due respect, I don't appreciate you insinuating that I'm being frivolous or careless with my finances.

I didn't mean to insinuate either of those things. The fact that you are considering your financial future and are here asking questions is evidence to the contrary. Many of us are here because we made some bad decisions at some point. That doesn't make us frivolous or careless. If we were posting on a message board about our financial decision years ago, maybe somebody looking at our situations from a more objective perspective could have warned us of the path we were on. You are posting on a public board and will get advice from many perspectives. It's up to you to take the advice you find useful and ignore what you don't. If you don't want my brand of advice, you may want to stop reading this now. I won't be offended or think you are rude. If you don't find my perspective helpful, there may be others in a similar situation who will.

I think you are a father who wants to do what most father's want to do and are optimistic about your job prospects. Your situation changed, so you should reconsider whatever spending plans you had when you were employed. You don't know how long you will be unemployed. Not all parents are able to do what they'd like to for their children. Your son is employed and has money saved to buy a car. He's old enough to understand that the money you set aside now needs to be used to provide food and shelter. He can decide whether to buy a car he can afford now and be prepared to spend money on repairs or save longer for a better car. If you find a job before he buys a car and haven't needed to use the money, you can contribute to a car at that point.

[BKAttyMI]

I agree with Lady, spending a large chunk of money while unemployed and not knowing how long that might be is not living within your means.

Not all used cars are "money pits", I still drive a vehicle I bought used 5 years ago. Having a mechanic look at a used vehicle and knowing what to look for makes a good used vehicle a bargain. But I agree, your 17 year old is old enough to understand finances, and this is a great financial lesson. You need to save that money and use it for yourself if need be in the future. If your employment situation changes, definitely help out your son. You're also walking a very thin line with preferential transfers, yet another reason to wait until employment prospects come up to contribute to this purchase.