Archive for the ‘Cars in Bankruptcy’ Category

What if you have assets during a Chapter 7 Bankruptcy in Manhattan: Dont be Greedy!

Wednesday, March 3rd, 2010

by:  Daniel Gershburg, Esq.

Lets be real.  No one necessarily wants to file for Chapter 7 Bankruptcy in Manhattan as a first step.  Its obviously a last resort.  You’ve gotten yourself into a ton of debt and there doesnt seem to be a way out.  But you have to take practical steps if you want to move forward during the process if you don’t want any issues.

What am I babbling about?  Well, under the Bankruptcy Code, you have certain exemptions, meaning you can keep a certain percentage of your stuff when you file for Bankruptcy and the creditor and Trustee cannot get their hands on it.  Some examples include $50,000 in home equity in your home, $2400 from a Bank Account, all of your IRA’s, 401k’s etc.  However, lets say you have some cash in the bank above that $2400 and you really need to get this Bankruptcy filed.  Dont hide it or move the money.  Don’t try and be crafty and put it into someone elses account.  Just let it go.  You heard me.  Let it go.

Lets say you had $100,000 in debt.  Not a crazy figure and I see it everyday in my Brooklyn office.  If I told you I could get rid of $100,000 in debt for $5,000, chances are, you’d kiss me (ethically inappropriate under most circumstances.)  However, the problem is many clients will try and save their very last dime from the Trustee, and thats just not a great way to go about doing things.  If you have $7000 in your bank account because you saved a couple of bucks, protect the $2400 and give the rest to the Trustee during the Bankruptcy filing.  The Trustee will be happy, which means less problems, if any, for the Bankruptcy, and for that amount of money you’ve known gotten rid of about $100,000 in debt.

It seems counterintuitive to us.  Why give up money when we can “protect” it.  I get that.  The problem is the amount your protecting as a percentage of the debt you’re being forgiven is minimal.  The trade off is absolutely amazing.  So my advice is not to mess up this amazing tradeoff but trying to keep every last dollar.  It will only cause problems for you and your attorney in the actual case.  Of course, like anything Bankruptcy related, there are many caveats to discuss, but in general I think you get the idea.

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Bay Ridge Bankruptcy Lawyer discusses keeping your car in a Chapter 7 Bankruptcy

Saturday, October 10th, 2009

I have devoted several blog posts to this topic, but the topic keeps getting brought up by clients, not only in Bay Ridge , but all over Brooklyn and Manhattan, so I will devote some more time to it, as I love my people.

So lets attack this : What happens to my car if I file for a Chapter 7 Bankruptcy in New York?

Well, your favorite Bay Ride Bankruptcy Lawyer says a few things can happen.

  • If you lease your vehicle in New York and you file for Bankruptcy, nothing happens.  You either get to keep the vehicle and re-affirm it (unless its a new Mercedez Benz, which can indicate bad faith), or you can give it back and you’re no long responsible for the vehicle and its deficiency.
  • If you own a vehicle and file a Chapter 7 in Brooklyn or Manhattan:  This depends on whether there is significant equity in your vehicle.  If there is no equity in your vehicle, and typically there is not since you’ve likely made a small down payment on the vehicle, your vehicle will depreciate quicker than you’re paying off your note on your vehicle.  In English, your car is worth less than whats owed on it.  Great, keep the car if you want or give it back.  Choice is yours.
  • If you own a vehicle in Brooklyn or Manhattan (you’re crazy-the paring garage’s will take your first born its so expensive) and you have significant equity in the vehicle before you file for a Chapter 7 Bankruptcy in Brooklyn or Manhattan, you will have a choice.  You need to know, from your trusty Bay Ridge Bankruptcy Lawyer, that you can exempt up to $2400 of equity in the vehicle, or $4800 if you file jointly (romantic), which will be yours if and when your car is sold.  That means if your car in Bay Ridge, Park Slope, or Williamsburg is worth $10,000, technically the Bankruptcy Trustee in Brooklyn can only get their hands on $7600 of that equity if they sold the vehicle.  The remaining $2400 is yours.  But be forewarned that if you own your car outright OR have significant equity, the Trustee will likely sell your car and pay off creditors with the money (and give you $2400 or $4800.)
  • You can also negotiate to purchase your car in a Brooklyn Bankruptcy…from yourself.  Lets say that car is worth $10,000, and you have your $2400 exemption, the Trustee is still going to have to pay expenses to sell your car (auction price, fees, shiny salesman guy, etc).  Therefore you make the Trustee an offer.  Your Brooklyn Bankruptcy Lawyer says to the Trustee:  ”Trustee (insert name), my clients are willing to give you $6000 for the vehicle in two payments of $3000 each.  Love (or sincerely), Brooklyn Bankruptcy Lawyer Daniel Gershburg.”  The trustee may accept this, or they may simply say I don’t like that offer make me another one.  Either way, if you have some disposable cash, you can and should be able to buy your car back.  On the other hand, for giving up a car worth several thousand, you’d also be able to get out of debt sometimes over $100,000.00. In any case, the choice is yours.

So now you know all (most) there is to know about whether your should file for Chapter 7 Bankruptcy in New York City if you own a car.  There are many more issues surrounding this topic, so please talk to a Bankruptcy Attorney in Bay Ridge, Park Slope, Williamsburg, Sheepshead Bay, or anywhere you may live in Brooklyn, before filing.

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Posted in Bankruptcy, Cars in Bankruptcy, Gersh Blog | Comments

Can I keep my car if I file Bankruptcy?

Tuesday, March 24th, 2009

In most instances, you can keep your car when you file for Chapter 7 Bankruptcy, although each state has their own exemption.  In New York, the exemption is $2400 for vehicles if you are filing Bankruptcy by yourself.  That means if you recently purchased a vehicle, and its worth approximately $2500 more than what you still have left to pay on the vehicle, technically the trustee can take the car, sell it, give you yur $2400 and then divy up the rest with your creditors.  That doesn’t happen so often for various reasons.  First and foremost, a car depreciates SIGNIFICANTLY in it’s first year of ownership.  That means that if you bought a new GM vehicle for $30,000 and took out a $30,000 loan on the car, chances are that car will be worth significantly less after its first year, and you”ll owe more on the car that what it is worth, thereby precluding the trustee from selling it.  But lets say you own an older vehicle and you have paid off most of the note, and the car has about $3500 worth of equity in it.  The trustee can technically sell this vehicle, but he/she always has to think of the transactions costs involved.  Just because a Kelly Blue Book valuation says a car is worth $5,000, doesnt mean someone will actually buy it for that price (especically in this market, and especially with SUV’s).  And even if it can be sold for that amount, there are always transaction costs involved in selling a vehicle that substantially decrease any potential profits the trustee can keep.  The moral here is, in many instances you can in fact keep your vehicle even after you file for Chapter 7 Bankruptcy, but be sure to discuss this with your attorney before doing anything.

Posted in Bankruptcy, Cars in Bankruptcy, Gersh Blog | Comments