Expert: Terry Leeders - 7/24/2007

Question
We have consulted w/a lawyer on filing chapter 13 bankruptcy and we were told of a few things but were not sure some of it is ethical and/or defendable to the trustee so I would like a some feed back and advice. Thank you for all your help.
1. Can we purchase a car since our car are junk and include the payments in our plan for the next 5 years on chapter 13?.
2. If I borrowed money against my 401k to purchase a car, can I include payments to the 401k on the 5 years chapter 13 payment plan?
3. Do you know if Kansas allows you to keep your tax refunds on chapter 13?.
4.  Does the court ordered or required that stocks be liquidated as part of Chapter 13?.  I have stocks valued at 10,000.00, I was told to cash in the stocks and use it toward a down payment to purchase a car or do repair on a home then then my situation is justifiable to the trustee.
5. According to the form, B22C, you are allow 2 vehicles and it's payments. If you only have 1 vehicle on payments and own the 2nd vehicle outright does to court allow you to keep the amount that has been identified under the standard allowance for the 2nd vehicle, or does the court make you include the extra amount in w/payments plan to the trustee?

Answer
1. if you purchase beforehand, you can include it, but you need to be careful on the type and year of the car, as that could force you to pay a higher % to your unsecured creditors.
2. 401k loan repayment is not a debt, as it is your own money, and thus cannot be included in the plan....you would also be creating an asset in the paid vehicle, thus having to pay a higher % to your unsecured.
3. I do not know kansas law.
4. you pay back to protect assets in ch13, nothing is liquidated.
5. In IL the caselaw states that you can only take that deduction for vehicles that you still owe on....it is just an allowable deduction to calculate what % of your debt you have to pay back according to the means test.