QUESTION
Should I hold off on selling my car (it is still under loan)?
Asked on May 17th, 2013 on Bankruptcy - Florida
More details to this question:
I'm looking into bankruptcy the past two-three years have been horrible. I went from making $40,000 a year to just $11,000 last year. I owe somewhere between $20,000-30,000 in medical and around 15 or less in credit cards. About a year ago, we were facing losing our Mazda 3 which is the only car we owned that could fit our child seat. My wife's mother bought this from us for what we owed on it so we wouldn't lose the car. She has continued to let us use it until we get out of debt and can pay her back. She is in possession of the title. We just have not signed it over to her yet. I am currently unemployed at the moment and am looking into selling my car to get money to survive. I just need to know, Will the courts think the selling of my wife's car to her mother is fraud? We had no intention of bankruptcy at the time.
6 ANSWERS
General Practice Attorney serving Coeur d'Alene, ID
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Michael B. McFarland, PA
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If you haven't signed over the title you haven't sold the vehicle. Idaho law provides that the title document is the sole determiner of ownership. Selling a car to a relative is not fraud, per se, but the price should be somewhere near fair market value. Talk to an experienced bankruptcy attorney before making any rash decisions.
Answered on May 22nd, 2013 at 12:20 AM
Sanford M. Martin
A debtor in Chapter 7 bankruptcy has various options regarding an auto. He may retain the car and reaffirm the debt with the lender, in which case the only penalty will be the equity in the auto (fmv less the debt of the auto). If you sell the car to a family member or other person within two years of filing, you must provide information about the transaction in your petition, however, if you are not transferring an auto which you have equity to another person for less than FMV, there is no reason not to so. It doesn't constitute fraud so long as you provide the information.
Answered on May 20th, 2013 at 10:35 PM
As long as this sale was made for fair market value, I don't see any bankruptcy trustee having a problem with it. After all, what other purchaser would buy your car & let you continue to drive it.
Answered on May 20th, 2013 at 1:51 PM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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Don't make any changes without talking to a good bankruptcy attorney first. There are serious issues when transferring any assets within two years before filing for bankruptcy.
Answered on May 20th, 2013 at 1:49 PM
Bankruptcy Attorney serving Oakdale, CA
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Law Office of Todd Whiteley
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Your wife's mother does not own the car - you do. The title is in your name. It does not sound like you perfected title or properly executed paperwork to make the debt owed to your mother-in-law a secured debt. If you have not started making payments to your mother-in-law on the car, DO NOT START NOW. DO NOT TRANSFER TITLE INTO HER NAME! There is a very good chance the car can be exempted - depending on how much in non-exempt assets you have. After you get the discharge, you can choose to repay your mother-in-law. But you CANNOT pay her during the course of your bankruptcy. It's only 3-4 months and the consequences of not showing this patience can include the car being taken - so be patient. Sit down with a lawyer and discuss in detail your assets and the exemptions available to you.
Answered on May 20th, 2013 at 1:48 PM
Bankruptcy Attorney serving Plantation, FL
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Moffa & Breuer, PLLC
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I don't recommend filing bankruptcy until you are able to support yourselves. Your attorney can analyze the vehicle situation closer to when you file the bankruptcy case.
Answered on May 20th, 2013 at 1:47 PM