DoIOweYouII Posted March 15, 2005 Report Posted March 15, 2005 Background: I have 3 leased cars with payments $584, $511, & $300 per month. The vehicles are for me, my wife, and teenage daughter. The $584 & $300 payment vehicles are Gold-Key leases with Chrysler. The $511 payment vehicle is leased from a bank. There is no equity in the vehicles, as they are worth much less than what is owed. I have roughly 2 years left on each of the leases. Payments are current, but I've gotten myself into a credit mess with unsecured credit cards and am contemplating filing bk. Since there is no equity involved, my understanding is that I should be able to reaffirm the vehicles. At the end of the lease for the $584 & $300 vehicles, I can continue paying the same payment for a set time should I decide to keep them (no refinancing involved). However, with the $511 lease, I either turn it in, or buy it for a set amount which I know that I won't be able to do. First question: If I voluntarily turn in the $511 leased vehicle to the bank, and before my credit goes sour, finance one that is affordable and I am able to keep longer than 2 years, could that potentially cause problems in getting a bankruptcy approved if this is done just before the bankruptcy is filed?Second question: What's worse in terms of hurting your credit for a longer period of time and getting car financing sooner: bankruptcy with no reposessions, or bankruptcy with a reposession? Or, does it not matter?
momof5 Posted March 15, 2005 Report Posted March 15, 2005 Obviously, you have a substantial income. You will be forced into BK13. You can keep the vehicles as long as you continue to make the payments, but that also depends upon what state you are in. Most states will only let you keep 2 cars, not 3.Any repo on your record makes getting that next car challenging - even with a BK. You will be charged enormous interest rates. I would like to make a small point here. You were living WAY above your means. The first thing that you really need to do is to take inventory of what you NEED to live and what is a "nice to have". Leases are notoriously low 'payment' as opposed to what it would have cost you to purchase the vehicle. You must be driving extremely high end vehicles. You then got into trouble with unsecured debt......While you were 'trying to keep up with the Joneses', they got a 1 year old car - to let someone else take the hit.... made a decent down payment, got a low interest rate and paid off the car in a short amount of time. They didn't buy that high end vehicle. Their personal value was not in their material possessions....that is why you are facing BK and they are not.You need to go to Amazon.com and get a copy of "The Millionaire Next Door" and have everyone in your family read it - including your daughter....you have set up unreasonable expections in her life from your behavior.Lecture over.... Mom out.
LadynRed Posted March 15, 2005 Report Posted March 15, 2005 His income is NOT what would force him into a Ch 13 - at least not yet. Ch 7 (right now) is not about total income, its about DISPOSABLE INCOME and THAT is what needs to be examined. Most of us will spend what our incomes will support. My expenses are going to be higher than someone who makes 1/3 what I do, that's just the way it works. You ARE going to have problems with 3 leased cars. If the total equity value of the vehicles won't fit within the exemptions for your state, you can probably kiss at least one of them goodbye - or you're looking at paying the trustee to keep it (redeeming it). Maybe its time to get the teenager a decent USED car that she can drive and be responsible for rather than giving her a "new" one to impress her friends with. If she works part time, SHE should be paying for the car - not you. Kids today have NO IDEA what fiscal responsiblity is, and that's especially true when Mom and Dad keep feeding their 'I want' syndrome.
DoIOweYouII Posted March 15, 2005 Author Report Posted March 15, 2005 Thanks for both of the responses. I live in S.C. by the way. My spouse and I have a decent income, but we certainly are by no means wealthy in any regards. Our gross income is slightly less than 100k combined. We are just an average middle class family whose spending went out of control. They say hindsight is 20/20. We realize our mistakes and we are not proud of the situation we are in. I am researching my options and that's why I am posting on this forum. As for the vehicles, we have no equity in them, as we owe more than what they are worth. I'd appreciate any information on how being upside down on your car(s) comes into play with any bankruptcy vehicle exemption limits. I had seen another post on here regarding someone else having 3 vehicles and the only way they could keep all 3 was if their daughter was added as a driver in the family. Any follow-ups regarding that? Also, if I were to let one of the vehicles go back now and I purchase a more affordable car as suggested before filing, will that raise any reg flags with the trustee/court when I file? I'm trying to get all of my ducks in a row before I schedule any appointments to speak with any attorneys. Thanks for any insight that you can provide!
LadynRed Posted March 16, 2005 Report Posted March 16, 2005 Its pretty typical for people to buy a reliable car before they file because loan rates AFTER bankruptcy will be insane - the Trustees know this so shouldn't blink at it.The vehicle exemptions in SC are, in general, for ONE car, but without any equity you may be ok. Being upside down is rather ideal, really, no equity to worry about exempting. Not all states allow you to keep 1 car per licensed driver. I know TX does, but not all states do. You really need to run that by your lawyer.
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