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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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i am filing for ch.13. my car lease is up in feb. 11, my

Resolved Question:

i am filing for ch.13. my car lease is up in feb. '11, my lawyer told me to purchase a new vehicle now. i tried a co-signer but b/c my credit score plummeted over the months, I cannot be put on the loan. i assume this would then mess up my means test to where i cannot claim any car value and payment. can a promisorry note be drawn up where i make payments to my (what was a co-signer and now will be the purchaser) to be sufficient for the means test/bankruptcy? i live in pennsylvania
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 6 years ago.

Hi Customer,

A promissory note would be sufficient for the Means Test/Plan. However, to assure that this payment will be allowed in full, the note would have to be secured by the car. If not secured, the promissory note would be paid off along with the other unsecured creditors - at a fraction of the total due.


Customer: replied 6 years ago.

thank you and who would secure the note, the car dealer? is there a legal term for it being secured?

Expert:  cfortunato replied 6 years ago.

The car dealer is not involved with the promissory note, which is between you and the purchaser. The promissory note would state that if it is not paid, then the car will be turned over to the purchaser. This will only work, by the way, if you are the owner or co-owner of the car - which should be possible even though you are not a co-signor on the loan.

Edited by cfortunato on 9/7/2010 at 9:04 PM EST
Customer: replied 6 years ago.
Ok, so if I am not on the car loan (which I cannot be at this point) how would I go about being the co-owner of the car? Mind you, the purchaser would be financing the car and not buying it outright.
Expert:  cfortunato replied 6 years ago.
There can be 2 owners of a car and only one borrower on the note. The title (ownership) is separate from the note (borrower). However, not all lenders will allow this. If the lenders your car dealer uses will not allow this, signing a promissory note will not help the Means Test.

Edited by cfortunato on 9/7/2010 at 10:12 PM EST
Customer: replied 6 years ago.
Thank you. Any suggestions I can take to my lawyer who was not sure of the promissory note; such as where it goes in the means test area, etc.? You have been awesome!!
Expert:  cfortunato replied 6 years ago.

The promissory note would go on form 22C - line 28C and section 47 of form 22C, and also on the Statement of Intention.


Edited by cfortunato on 9/7/2010 at 11:12 PM EST
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