keep car loan if someone else is paying it now?

[bethgould]

I just started taking over my mom's HSBC car payments and took her car as my own (unofficially until the loan is paid off in 2 years & she signs title over to me). I had to pay almost $600 to get them to stop repo proceedings, and I'll get her loan current within 2 months. Anyway, she may need to file a BK soon so that she has a better chance in getting into an affordable housing apartment (they check your credit) since her credit has gotten really bad in the past 1 1/2 years (became too disabled to work in her retirement anymore).

In this situation (I'm paying her loan) do you think that she will be allowed to exclude it from her BK? I don't know if she will be filing Ch7 or Ch13. She only has the car. No property or possessions of value, and her only income now is her SSI check each month (around $740 I think).

[bethgould]

anyone?

Anyone?

I just started taking over my mom's HSBC car payments and took her car as my own (unofficially until the loan is paid off in 2 years & she signs title over to me). I had to pay almost $600 to get them to stop repo proceedings, and I'll get her loan current within 2 months. Anyway, she may need to file a BK soon so that she has a better chance in getting into an affordable housing apartment (they check your credit) since her credit has gotten really bad in the past 1 1/2 years (became too disabled to work in her retirement anymore).

In this situation (I'm paying her loan) do you think that she will be allowed to exclude it from her BK? I don't know if she will be filing Ch7 or Ch13. She only has the car. No property or possessions of value, and her only income now is her SSI check each month (around $740 I think).

[readytofile]

Depends on how much her car is worth vs how much she owes on it and if she can exempt any value she has in it. If the car is worth less than what she owes and you keep the payments current she may be able to reaffirm or ride through. Best to ask an attorney who knows the laws for your state.

[bethgould]

I guess it would depend on how they figure her car's value. Kelly Blue Book states that her car is worth $6,005 for private-party value, and $4,075 for trade-in value. Her current payoff (as of 1/27) is $5,773.

[readytofile]

Well you'd also have to know what your state's automobile exemptions are as well. Definitely better left to an attorney to figure out.

[bethgould]

Last night I asked her to ask about this scenario when she calls a legal help line (ASAP). To make things more difficult, I can't have the car financed in my own name because I'm going to file a BK soon. I took her car over at the same time I decided to surrender my own financed car (owe double what it's worth, and it needs major work on it that equals the car's value). I payed her loan instead of mine, so soon mine will need to be surrendered (or repoed after 60 or 90 days I suppose).

Well you'd also have to know what your state's automobile exemptions are as well. Definitely better left to an attorney to figure out.

[olivies]

I'm not sure how it'll work out for your mom. But it may be advantageous to you in your bk. We are in a similar situation. My mom took on a car loan for my sister, my sister didn't pay, so mom took the car. She didn't need another vehicle and couldn't really make the payment herself so we took the car and are making the payments. In our bankruptcy, this meant there was no asset there for us because it's mom's property and technically she is letting us "borrow" the vehicle and we are paying her costs.

[bethgould]

that's what my bk attorney said!

I'm not sure how it'll work out for your mom. But it may be advantageous to you in your bk. We are in a similar situation. My mom took on a car loan for my sister, my sister didn't pay, so mom took the car. She didn't need another vehicle and couldn't really make the payment herself so we took the car and are making the payments. In our bankruptcy, this meant there was no asset there for us because it's mom's property and technically she is letting us "borrow" the vehicle and we are paying her costs.

This is what a bk attorney told me last Friday, in my short free consult. I was glad to hear that news. Now I just need to make sure that Mom's finance company, HSBC, will allow her loan to be re-affirmed!

[BKDefender]

Your mom's BK trustee shouldn't have a problem with your arrangement because your mom's estate is increasing without any expense. But your BK trustee might have a problem with you transferring money to your mother each month to pay her debts.

You might consider a written agreement with your mother where you agree to pay $X/month for the use of her vehicle and then you reaffirm that contract when you file BK. Or at least discuss this with your BK attorney if he thinks it's a good idea to memorialize your agreement in writing.

--William

[bethgould]

Thank you for that very good idea, William. A written agreement sounds like a good plan of action. My concern now is, though, that I'm still paying the back payments that my mom couldn't keep up with. It will be several months before I'm completely caught up and paying the current monthly loan amount.

Your mom's BK trustee shouldn't have a problem with your arrangement because your mom's estate is increasing without any expense. But your BK trustee might have a problem with you transferring money to your mother each month to pay her debts.

You might consider a written agreement with your mother where you agree to pay $X/month for the use of her vehicle and then you reaffirm that contract when you file BK. Or at least discuss this with your BK attorney if he thinks it's a good idea to memorialize your agreement in writing.

--William