Using Chapter 13 to Save a Car
Aurora Illinois Bankruptcy Lawyers & Attorneys
Jesse Barrientes: And before I forget and I wanted you to remind me. And Dave you didn't.
David Siegel: Kelly Blue Book.
Jesse Barrientes: There you go.
David Siegel: We're not out of time yet, Jesse. I still –
Jesse Barrientes: We're not out of time. Well good. What I wanted to – because when people do Kelly Blue Book there are three different values. So what kind of value is the trustee really looking at? I mean you have your resell value, your private party value. You have, you know, the trade-in value and then the dealer value.
David Siegel: Yeah. We're typically gonna go with an average of them, which is the middle. Not the highest. Not the lowest but what a typical value is. What the car's really worth. What it could be resold for. It's usually gonna be in the middle of the Kelly Blue Book or the NADA guide.
Jesse Barrientes: Mm-hmm.
David Siegel: So we're gonna come up with a value on the vehicle. We're not gonna fight too extensively over that because it's really not worth it. We're not talking about a big difference between values sometimes between what the creditor wants and what the client wants. And we can usually agree on a compromise like all other legal cases. There's got to be a balance.
Jesse Barrientes: Well, Dave, you know when you think about an Aurora Chapter 13 bankruptcy case, people do it typically to save their home or even an auto that is behind because they need that automobile in order to get to work. Right?
David Siegel: Right. Right. You definitely want to do a Chapter 13 to save a vehicle. You need that for transportation. You need that to get to your job. You need that to be able to make your mortgage payments basically. If you live in a suburb or you live in a rural area you definitely need a vehicle. If you live in the inner city then maybe you can get by on public trans. But, yes, Chapter 13 definitely very commonly used to save an auto – restructure the loan. An example you gave earlier, a $15,000 vehicle, you're only gonna pay back $7,800 over time at a lesser interest rate, that is a great savings over time. So it could be a financial tool for someone who is struggling to be able to keep their property and yet not pay back the full amount.
Jesse Barrientes: But pay back something.
David Siegel: Pay back something. Pay back what they can afford over the next three to five years based on their income minus their expenses.
Jesse Barrientes: Right. And then when you look at the planned kind of payment – the – and we've talked before about what's allowable, what's left after the allowable expenses and those were some of the expenses we've talked about. For example, your mortgage. You still have to keep your mortgage current in a Chapter 13 'cause the amount that's in the plan is just the arrears.
David Siegel: That's right. You have to make your ongoing mortgage payment. First, second, third. However many mortgages you have consistently, timely, each month while you're in a Chapter 13 case in Aurora. This is on top of the Chapter 13 trustee payment, which is going to be used to pay your arrearage, your vehicle, and all of your other debt. So it is a tough thing to do but if we go through an analysis and we determine you have the ability to do it, we're gonna recommend a Chapter 13 for that very reason.
Jesse Barrientes: This has been very informative, Dave. I think that a lot of people out there are gonna realize that, you know, there is a light at the end of the tunnel and the dog days of summer is just begun.
David Siegel: Absolutely. Chapter 13 is a great way to go.
Back to Aurora Illinois Bankruptcy Lawyers & Attorneys
See Also:
Chapter 7
Misconceptions about Chapter 7
Life after Chapter 7 bankruptcy
Privacy is protected in bankruptcy
Household income qualifications
Converting Chapter 13 to Chapter 7
Converting Chapter 7 to Chapter 13
Chapter 13
Using Chapter 13 to save a home
Choosing Chapter 13 versus Chapter 7
Debt consolidation & late fees
Administrative fees & the bankruptcy trustee
Chapter 13 payment plan dismissal
