Expert: Mark J. Markus- California Bankruptcy Attorney - 9/5/2008

Question
QUESTION: I am on the verge of having to file bankruptcy. I have several rental properties that have drained me financially. Tenants not paying and vacating property without notice, as well as massive credit card debt from fixing and keeping up the properties. One of my parents bought me a car because I couldn't use my credit. My question is can I put my parent down as a creditor as I make the payments directly to the car company. The car is not in my name but it is my car and I make the payments. I need to keep the car as its my only transportation. I don't want this to affect my parents credit. All of my properties have foreclosed and I have over $50,000 in credit card debt. Can I put my my parent as a creditor but have this debt reaffirmed in the banckruptcy? I need to list the car payment in the bankruptcy as it is my car note. I'm trying to pass the means test. Any advice is greatly appreciated.

ANSWER: I don't think I understand your question.  If you owe money to your parents, then you must list them as a creditor.  If you don't, you cannot list them as a creditor.

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QUESTION: The car is financed in one of my parents name and I make the payments directly from my checking account to the finance company as well as insurance and maintenance.  In order to pass the means test, I need to list my car payment. Will I be able to list this car payment as a debt and have it reaffirmed, as I have a promissory note with my parents for the car. Thanks

Answer
You can only include the payment of that debt on the means test if you have a contractual obligations to make secured debt payments on it.  The promissory note you have with your parents would have to also have a valid (according to your state's laws) security agreement signed and filed with the proper agency.  I don't think that's even possible if they don't own the car, and your agreement with them would have to be for purchase of the vehicle.  You may be able to take the general operation expense for the vehicle on the means test, but again that may come down to provability of the required agreements.  You really need to consult with an attorney in your area on this, because it may depend on how the US Trustee's Office in your district handles these types of situations.