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Question: Just a court order being sued for a car that I returned. Nevada Pegasus went to Pacific credit exchange. I contact them when I got the notice and they said they never sent anything to me. So I just forgot about it. Now got this notice being sued. I don't have any money every cent I make is spoken for and in fact I only eat 2 meals I day sometimes and still short. the reason is i bought another vehicle and payments are $354. want to either do adr or file bankruptcy either chapter 7 or chapter 13. If I file chapter 7 do I do it against my new car loan? What should I do?
Response: If you are eligible, you can file Chapter 7 bankruptcy protection to wipe out the deficiency for the car you returned. Also, you can put your new in the bankruptcy if you can no longer afford to pay for the car. Otherwise, you can put down in your Chapter 7 Statement of Intention that you would continue to make payment under the existing contract. You are not reaffirming the loan on the new car loan. No matter what the lender says, reaffirmation is almost always not in the best interest of the consumer. If you reaffirmed the loan, it means that you have lost the benefit of your bankruptcy for the reaffirmed debt. This means if down the road you are unable to make the payment on the new car and want to return the car, you would run into the same problem as you have now with the car finance company coming after you for the deficiency after they have sold the car. Reaffirmation nullifies the benefit of your bankruptcy protection. If you do not reaffirm the debt, your personal obligation on the Note would be discharged with your Bankruptcy Discharge Order. This means that the lender CAN NEVER come after you for deficiency after selling the car.
You would be eligible to file for Chapter 7 bankruptcy protection, if you meet the Means Test—the income test. If your income is equal to or less than the current income guidelines for your family size in your state, you would be eligible to file for a Chapter 7 bankruptcy all things being equal. The income used in calculating the Means Test is the income for the 6 months before the filing of the bankruptcy petition. This means that if you are filing for bankruptcy protection this month, February 2013, the income that would be used is your income from August 2012 to January 2013. If you are filing next month, March 2013, the income that would be used in the Means Test calculation would be the income from September 2012 to February 2013, etc. In Chapter 7, if the Court grants you a Discharge your debts will be wiped out with some exceptions such as some taxes, child support, and alimony, which are not dischargeable. You would get a clean state, a fresh start.
The filling fee for Chapter 7 is $306.00. You may able to waive this filing fee if your income is 150% below the current poverty guidelines. Click here for current poverty guidelines:
These are current income guidelines for the State of California:
Family size of one person $49,188.00
Family size of two persons $63,481.00
Family size of three persons $68,135.00
Family size of four persons $77,167.00
Add $7,500.00 for additional individual
You must receive budget and credit counseling from an approved credit counseling agency and obtain a Certificate of Credit Counselling to be filed with his bankruptcy case. The agency will review possible options available to you in credit counseling and assist you in reviewing your budget. Different agencies provide the counseling in-person, by telephone, or over the Internet.
It is usually a good idea for you to meet with an attorney before you receive the required credit counseling. Unlike a credit counselor, who cannot give legal advice, an attorney can provide counseling on whether bankruptcy is the best option. If bankruptcy is not the right answer for you, a good attorney will offer a range of other suggestions. The attorney can also provide you with a list of approved credit counseling agencies, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm
After your case is filed, you must complete an approved course in personal finances. This course will take approximately two hours to complete. Your attorney can give you a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm
Consult a local bankruptcy attorney for further explanations of your rights and responsibilities.
The sites below are good resources for finding bankruptcy attorneys in your area:
If you cannot afford an attorney, then the next best alternative will be to use bankruptcy petition preparer. Bankruptcy petition preparers prepare bankruptcy forms but they cannot give you legal advice because they are not attorneys. Click on the links below for some of the bankruptcy petition preparers. You can do some searches on Google or Yahoo if you do not like the ones on the links below.