Vehicle Purchase Prior to Bankruptcy Filing Generates Chapter 13 Objections
By Jonathan Ginsberg, Atlanta Bankruptcy Attorney on Oct 31, 2007 in Chapter 13 Bankruptcy, Georgia
In the Northern District of Georgia, recent car purchases can create problems in Chapter 13 cases. I currently represent a debtor who moved to Georgia within the last year following a divorce. My client has a son who lives in the midwest with my client’s ex-wife, and my client tries to visit his son every month or so by making a 12 hour drive whenever there is a long weekend.
Earlier this year, my client decided to purchase a more reliable vehicle than the four year old truck he had been driving. The replacement vehicle is a sedan that retails for about $25,000. In July of this year, I was retained and we filed a Chapter 13. Because of the recent purchase of the vehicle the trustee objected to confirmation and insists that we pay unsecured creditors at least 70% rather than the 15% provided for in our original plan.
My client was therefore faced with a plan payment of around $1,100 rather than $800. The $300 does not exist in his budget but the Chapter 13 trustee does not care. Our options are to accept the $1,100 payment or argue the case before the judge, who is known to be somewhat conservative. My client opted to go with the $1,100 payment and we will look at trying to modify the plan down the road if he is unable to find a second job.
The lesson - at least in the Northern District of Georgia, be very wary about filing for bankruptcy if you have recently purchased and financed a vehicle. For whatever reason, the trustees here have a problem with this type of vehicle purchase.
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