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If You Are Contemplating a Bankruptcy in Arizona, Here's a Secret About Cars in Bankruptcy Cases, and Afterward: Edmund's True Market Value(tm)

By Joseph McDaniel, Esq.

So what do you use to value cars for purposes of listing them in your schedules?

Well, you probably ought to use excellent private party sale value from Kelly Blue Book, because the bankruptcy trustee will. At a very minimum, you need to be aware of the excellent private party sale value so you can explain why the vehicle doesn't meet the "excellent" criteria, and be prepared to have the vehicle inspected to determine for sure that it doesn't have any transmission. And explain where the transmission has gone.

On the other hand, some Arizona bankruptcy debtors, prior to filing, or after a bankruptcy filing, need to buy a car. In negotiating for that car, there is another tool they can use: the Edmund's True Market Value(tm).

Now, I don't get  a kickback or honorarium from Edmond's, but if I were going to buy a car, either prior to filing a bankruptcy, or after a bankruptcy once I'd let my expensive lease or expensive car payment go the way of the Dodo, I'd use Edmund's. For a new or a used car, before or after a bankruptcy.

Why?

Well, I know a smart couple. They went to a dealer to buy a car. They handed the salesguy the page with the Edmund's True Market Value(tm) on it, and they paid $8,000 dollars less for the same make and model as the nice folks who didn't use Edmond's.

True story. 

Knowledge is power, according to Francis Bacon.

Now, not all knowledge is actual day-to-day power. If you know Green Lantern's Charging Oath by heart, backwards, it will probably not give you great benefit on a day to day basis.

If you know how to make a souffle that will not fall, and is adequately fluffy, you can earn the love of your friend's tastebuds (but you probably already have that, what with the home-made ice cream and all).

But knowing what a car that you wish to purchase or sell is really worth seems a very useful chunk of knowledge, if you're going to be buying or selling cars!

p.s. obviously, if you're going to buy a vehicle prior to bankruptcy, you need to be sensitive to the exemption limits for vehicles in Arizona (assuming that you qualify for those exemptions) and to the issues relating to pre-bankruptcy planning. And you'll want to sell cars, if you do, for fair market value (not for a buck to your sister), and keep track of where you spent the dough, and understand the phrase, "pigs get fat and hogs get slaughtered". And list any substantial transactions on your schedules, of course.

And recall that nothing whatsoever that you do or do not do prior to a bankruptcy is without risk. 

Full post as published by Arizona Bankruptcy Attorney Blog on September 28, 2010 (boomark / email).