can I keep my car with 7?

[jr1129]

I have no property etc. except for a car, the loan is probably about equal to what it is worth. Have had it for about 18 months. My husband was hurt and due to surgurys etc unable to work, with no disablility. We have'nt gone in to talk with a lawyer yet but more than likely will end up filing bk. Under chapter 7 is there anyway to keep our car? Also I have heard the new laws go by income. Will they look at our income now that he isn't working (he is on extended leave, for possibly a year) or what we made before all of this?

[momof5]

1. Yes, you can keep the car if you re-affirm the debt.

2. Yes, which BK you file is income based, but they may pull an average containing prior pay in order to determine his ability to pay.

Another thing to consider....

For example, lets say you don't work or have a low income and you are on the car note. You can file BK w/o your spouse on it. The BK protects collections on him when you file and then it is based on your income.

Here is what I did...my husband was an alkie/addict. He was destroying our finances. The house was going into F/C and the cars were on the brink of repo. I was angry at him. I decided to protect myself. I filed BK w/o him. It stopped all the actions against my property. I also included ALL of his debts just so they wouldn't come after me for it. Later, the BK was discharged. My attorney informed me that they could not collect on his separate debts or any joint debts that were discharged (with respect to ME) as long as we were married because to collect against him was tantamount to collecting against me!

Ultimately, I did divorce him, but not for another 5 years. (masochist, I guess!)

BK laws have changed, so I would consult an attorney and see what is the best course of action for you.

[Methuss]

As momof5 said, you may have to reaffirm the debt to keep the car.

Tennessee has a $4000 "wildcard" exemption that can be applied to any personal property (including cash). You can also cram-down the loan. A cram-down means if you owe more than the car's blue-book value, you use the blue-book value.

So if the NADA blue book (resale) value is less than $4000, you can keep the car and discharge the loan by using your wildcard exemption.

If the car's NADA blue book value is more than $4000 but substantially less than what you owe on the loan, it is probably not a good idea to keep the car. You could redeem it for the resale value through a finance company, but the interest rate you'd pay may not be worth it in the long run.

Or you could reaffirm it and keep paying it off under the old terms. Be very aware that ride-through (paying a loan through bankruptcy and not formally reaffirming) is not allowed anymore.

[LadynRed]

First, cramdowns have pretty much been eliminated under the new BK law. Thank the car dealership lobbyists for that little gem. Second, unless you've been making payments for MORE than 2-1/2 years, you MUST reaffirm the loan to keep the vehicle - and you pay FULL COST PLUS INTEREST - no cram downs.

Lastly, your HOUSEHOLD income is what is used for the means test and it takes the average of the prior 6 months of income. If your DH has been out of work for less than 6 months, you could still wind up above the median allowed income for Ch 7.

In TN, you really can't exempt cash. BK lawyers here will tell you that you can't have more than $100 in cash in bank accounts or on-hand, the exemptions don't protect cash unfortunately. It does go to all of your personal property AND that 4K exemption includes equity in ONE vehicle. In TN you can DOUBLE the exemption if a married couple files together.

[Methuss]

First, cramdowns have pretty much been eliminated under the new BK law. Thank the car dealership lobbyists for that little gem. Second, unless you've been making payments for MORE than 2-1/2 years, you MUST reaffirm the loan to keep the vehicle - and you pay FULL COST PLUS INTEREST - no cram downs.

Cram down was elimited in chapter 13. It still is available under chapter 7 according to my attorney. You do have to have had the note on the car for more than 2.5 years to take advantage of it though. And redemption (at cram-down) is still an available option. The main difference in cramming down is that it is no longer based on trade-in value (black book) but on replacement value -- what you would pay if buying it at resale (blue book).

I just went through this recently and dodged a BK bullet myself. Bought a new house, couldn't sell the old one due to market deterioration...rented the old place out 4 days after consulting with a BK attorney. So I was able to take that option mostly off the table (as long as my tennants pay their rent on-time).