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Chapter 7 and vehicles

Discussion in 'Bankruptcy Law' started by Marybell, Mar 2, 2020.

  1. Marybell

    Marybell Law Topic Starter Member

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    Hello,
    My husband passed away 2 months ago. We have 2 vehicles that are not paid off, I keep making payments. We were going to file chapter 7 together. I m not 100% sure whether or not I will need to file myself, suppose I have to file Ch 7 bankruptcy alone in a couple of months.
    A married couple undergoing bankruptcy is allowed to keep 2 vehicles for personal use. Now I have one adult in the family, and 2 vehicles. I HAVE talked to several lawyers, and they all had a different opinion on what best course of action should be.
    Titles are in my husband's name. I have an opportunity to pay off both vehicles or at least one. After that I can transfer title(s) into my name. We also have a teen who needs a car to drive to school. Some scenarios:
    1- I pay off both vehicles, we keep both vehicles and then I file bankruptcy, what happens? Will they make me pay them the Kelley blue book value of the car?
    2- What happens if I sell one of the vehicles we have and use this money to buy a different car for my child (nothing expensive of course) , also adding child's name into title - then file Ch 7? The child is 15 yo
    3- I don't pay off any vehicles, continue to make monthly payments, use one of them myself, our child drives another, then I file bankruptcy. What happens?
    One lawyer told me that I should stick with #3, this way it would be hard for the court to get any cash from any of the vehicles that still belong to bank, this way we lose less.
    Another lawyer told me that if I really want to pay off a vehicle, I should pay off the one I will want to keep for myself.
    I was also told that in the situation I sell one vehicle, the court would look at the difference between the selling price and pay off balance (exactly, what I put in my pocket) then I may be allowed to "use" this amount towards, say, funeral expenses that I had to pay when my husband passed away. This way I may not owe anything to court. True or not? Also, for this scheme to work, is it a good idea to pay off the balance first and then sell the vehicle, or should I sell it while I still have unpaid balance (which may be tricky). In other words, if I use my own funds to pay if off and then sell it , would the court still look at the difference (sell value - unpaid balance = net profit) ? thanks
     
  2. flyingron

    flyingron Well-Known Member

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    You need to obtain an attorney for your bankruptcy and follow his advice. You do not want to try to "game" the system by making preferential payments to one creditor just before the bankruptcy. We can't possibly advise you what the best course of action is without understanding the entirety to your debt problems (you're obviously not filing bankruptcy jus tover a couple of car loans).
     
  3. Marybell

    Marybell Law Topic Starter Member

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    thank you. You are right that there is more debt than car loans. However, most of that debt is in my husband's name and my husband has died. I will have to wait and see if I need to file bankruptcy. The problem is that I need to make a decision regarding the cars now. Also, car loans are secured debt which is a different story in term of bankruptcy.
     
  4. Zigner

    Zigner Well-Known Member

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    I'm missing something here - if it's not your car, then how do you expect to keep it? If you expect to use some sort of simplified procedure to transfer the car in to your name, then the lender will almost definitely have to approve of it. That would mean that the debt transfers with the car, or that you turn the car in to the lender.
     
  5. flyingron

    flyingron Well-Known Member

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    If your husband's estate is insolvent, you're not likely going to be able to keep the cars at all. They're not yours and you making payments on them isn't going to change that, and nothing will get them transferred to you if they are needed as an asset of the estate.

    My suggestion if indeed you are not responsible for any of these debts (cars and everything else) is to not pay any of them. Save your pennies, and when the cars are yanked from you, replace them with something else cheap.
     
  6. Marybell

    Marybell Law Topic Starter Member

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    I have explained that I m current on all payments and even more - planning to pay off the balance. Why should the lender be against?
    Transferring of the title will happen very promptly when the balance is paid off (or we don't owe anything to the lender)
    Another possibility would be to get loan transferred into my name, but I have to apply for the loan, be approved, etc. If this happens then the title would also be transferred into my name by DMV
     
  7. Marybell

    Marybell Law Topic Starter Member

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    not sure what an insolvent estate is. In my state, cars can be transferred without opening a probate, we were a family with shared finances, I keep making payment for the cars. Why should they be taken away? I personally am not filing a probate because there is no assets to probate.
    In the process of what, according to you, should the cars be taken away? (I don't get this portion)
    I was told several times (by DMV and by the lender bank) that there will be no problems to transfer titles when either 1) balance is paid off or 2) loan is open in my name, instead of my husband's name
     
  8. Marybell

    Marybell Law Topic Starter Member

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    The chronology is as follows:
    At this time, nobody has any lawsuits / probates open against us. If there is a lawsuit open then I will file bankruptcy immediately. During the bankruptcy, I should be able to keep at least one car, given that title or loan will be in my name (this is why I am working on getting this done, but want to do it in the right way, keeping in mind POSSIBILITY of bankruptcy in the future). Potentially, I would like to save both cars from being (what is it called when you have to give them away or pay for having them), knowing that there is another driver in the family (my child)
     
  9. Zigner

    Zigner Well-Known Member

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    You are correct - if the loans are paid off, the lender likely won't care.
     
  10. Marybell

    Marybell Law Topic Starter Member

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    Here is an interesting question that I've got. Would it matter, in terms of potential bankruptcy if I just pay off my husband's loan then transfer the title into my name, or transfer the loan into my name first, pay off the balance, then transfer the title?
     
  11. Zigner

    Zigner Well-Known Member

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    Look at it this way: Why are you paying off someone else's debt when you could use the same money to pay off your own debt and avoid bankruptcy? As advised previously - you need to consult with a bankruptcy attorney.
     
  12. Marybell

    Marybell Law Topic Starter Member

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    I wouldn't be filing bankruptcy because of the vehicles loans - it would be over different debt.
    Look at it this way: I'm paying off my husband's car loan to be able to transfer title of the family asset into my name and my possession so that I have means of transportation. There is no guarantee that bank would approve vehicle loans in my name.
    I have talked to several lawyers. They all say different things. Not sure who to listen
     
  13. Zigner

    Zigner Well-Known Member

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    If you have enough money to pay off two car loans, then you should have enough money to pay a large portion of your other debt...

    Talk to the attorney you retain for your bankruptcy.
     
  14. Marybell

    Marybell Law Topic Starter Member

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    what makes you think so? Unpaid balance on the vehicles may be 3000 while other debt can be 100 000. Also, vehicles are secured debt, I don't want to find myself with no car. We have no public transportation where I live
    Also, what do you suggest me to do regarding vehicles? How much longer should I drive a vehicle that belongs to someone who died? What should I do when its time to pay registration? Just pay it? My understanding is that I should take care of the assets I inherit. And my understanding is that I do inherit the vehicles even thought they are not paid off (well, not quite inherit, since they are not paid off, but I do have a chance to pay them off and transfer the titles)
    I will know if I need to retain a bankruptcy attorney later, when I have understanding about the necessity to file my own bankruptcy. Most debt is in my husband's name, it may just fall off. AGAIN, secured debt (vehicles) is a different story.
     
  15. Marybell

    Marybell Law Topic Starter Member

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    Speaking of my own debt, I have a student loan that also needs to be paid off, I have a medical bill for my child's braces (the child keeps receiving services there) and some credit card debt. A bankruptcy attorney said it would be OK to pay off one vehicle, my student loan and that medical bill without a fear to be accused of paying one debtor over the others.
     
  16. Zigner

    Zigner Well-Known Member

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    It always bites me in the rear end when I make statements in situations such as this. You need to speak to YOUR attorney who will have all the facts and can make suitable recommendations. An internet forum is NOT going to help you.
     
  17. Marybell

    Marybell Law Topic Starter Member

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    Today I checked my status on past-due credit card accounts that are on my credit report. I am only an authorized user (thought I was joint owner), I shouldn't be liable to pay off the balances. This means I shouldn't need to file bankruptcy at all. All large debt (credit cards and personal loans) are in my husband's name only (there are some medical bills in his name that can be potentially turned over to me but its not amounts I would file bankruptcy for). I plan to go ahead and pay off balances on both vehicles loans and get titles transferred into my name. Tag office said if there is no will then I am the heir.
    Am I not missing anything?
     
  18. Zigner

    Zigner Well-Known Member

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    Same answer as in your other thread.
     

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