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  1. #1
    Join Date
    Oct 2012
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    1

    Default Selling a Vehicle While in a Chapter 13

    My question involves bankruptcy in the state of: Michigan

    I am currently in Bankruptcy limbo. I originally filed a Chapter 13 bankruptcy then converted to a Chapter 7 which the US Trustee states I don't qualify for. I had a hearing to dismiss last week and we all agreed to convert me back to a Chapter 13. My attorney's office has not done that as of yet. I have two vehicles in my name, one of which I owe several thousand dollars on, the other is almost paid off and will not go into my new plan. There are three people in my household. One of the vehicles needs alot of repairs which happens to be the one I owe the large amouunt on. Because it's a 910 vehicle if I give this one back I will still be liable for the difference between the auction amount and the amount I owe. The Trustee in my area generally only allows one vehicle in a debtors name, however the car dealer I spoke with stated he may make an exception due to the fact that I work out of town and my mother needs transportation to the doctor, pharmacy, store, etc while I'm gone. I'm thinking about selling the vehicle that's almost paid off. It's probably worth approx 1,000 more than what I owe on it. Is possible to sell a vehicle in my situation and if so do I need the Judges's permission first? It just doesn't make alot of sense to me to give a vehicle back that I still have to pay the majority of the loan back for. I don't know how the Trustee would view this or if it's allowable.

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Selling a Vehicle While in a Chapter 13

    If your car loan is part of your Chapter 13 plan, and you sell a vehicle that is included in that plan, payments will continue to go to the secured creditor until you successfully modify the plan; the payoff associated with the sale would also be the full amount owed, even if you would otherwise pay back less over the course of the plan. As you appear to be excluding the vehicle from the Chapter 13 plan, that shouldn't be an issue, but assuming you in fact sell it for more than you owe you will need to report the increase in your disposable income to the trustee, and the trustee may see the elimination of the second car payment as increasing your discretionary income. Also, it becomes a lot less credible to argue, "My family needs to have two vehicles," after you voluntarily sell one of your two vehicles - and, at that, the better working of the two.

    You should be discussing these issues with your lawyer.

  3. #3
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: Selling a Vehicle While in a Chapter 13

    Your mom is responsible for buying her own car or paying for her own transportation.

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