Deal­ing with auto woes in bank­ruptcy

Ask­ing for a com­pany-leased car may seem a good idea — un­til you con­sider in­sur­ance.

Los Angeles Times - - MARKETPLACE - By Liz We­ston Liz We­ston, cer­ti­fied fi­nan­cial plan­ner, is a per­sonal fi­nance colum­nist for NerdWal­let. Ques­tions may be sent to her at 3940 Lau­rel Canyon, No. 238, Stu­dio City, CA 91604, or by us­ing the “Con­tact” form at askl­izwe­ston.com.

Dear Liz: My spouse and I are in Chap­ter 13 re­pay­ment bank­ruptcy and have a few more years to go. We’re ob­vi­ously on a tight bud­get.

My spouse has the re­li­able car, but I’ve al­ready paid $1,500 cash each for two junkers and it’s caused ma­jor stress. I know we can pe­ti­tion the court and be al­lowed to get fi­nanc­ing, but we do not want to and can’t af­ford to on our bud­get.

I am, how­ever, up for an eval­u­a­tion and raise soon at the small, pri­vate com­pany where I work.

I am think­ing of ask­ing that in­stead of a raise, they lease a ve­hi­cle for me. I do travel some­times for busi­ness so it could be le­git­imized in that sense. If they leased a ve­hi­cle for, say, $200 a month, that would be close to the raise I’m ex­pect­ing.

The real ques­tion is how to han­dle in­sur­ance and li­a­bil­ity. Is it pos­si­ble for my com­pany to lease a ve­hi­cle but have the in­sur­ance li­a­bil­ity fall on me, mean­ing would I be able to in­sure it un­der my own pol­icy though the lease would be through the com­pany?

An­swer: Prob­a­bly not.

A per­sonal auto pol­icy might not even cover your own car if it were used pri­mar­ily for busi­ness. Per­sonal poli­cies typ­i­cally wouldn’t cover a car owned or leased by your em­ployer.

Also, busi­nesses usu­ally need more li­a­bil­ity cov­er­age than most in­di­vid­u­als carry, since com­pa­nies can be big­ger law­suit tar­gets. You can ask for a leased car in lieu of a raise, but ex­pect the cost of the in­sur­ance to be part of the cal­cu­la­tion and be pre­pared for the com­pany to de­cline.

It’s un­for­tu­nate you bought two junkers in a row, be­cause the amount you ul­ti­mately spent could have bought you one de­cent car.

Car com­par­i­son site Ed­munds has ad­vice for find­ing re­li­able ve­hi­cles for $2,500, which it says is a rea­son­able bud­get for buy­ing a solid car.

The ve­hi­cles are likely to be 10 to 15 years old and may have over 150,000 miles on the odome­ter, but if they’ve been well-main­tained they can be re­li­able rides for sev­eral more years.

You’re likely to get the best deal via a pri­vate party sale, and you’ll want a good me­chanic to check out any car be­fore you buy. Your me­chanic may even have a lead or two on cars that could be good can­di­dates.

Your raise may en­able you to re­visit the idea of fi­nanc­ing a car, al­beit at a high in­ter­est rate.

As you know, you won’t be able to buy any­thing ex­trav­a­gant, and the pur­chase will have to be ap­proved by both your trustee and the court. If the car is a ne­ces­sity for you to get to work and you’ve been in your re­pay­ment plan at least two years, you have a good chance of be­ing al­lowed to fi­nance it.

If the car is not a ne­ces­sity, you may have other op­tions.

If you live in a city, a tran­sit pass may get you to most of the places you need to go and you can rent a car or use a ride-shar­ing ser­vice when you need more cus­tom trans­porta­tion. Many peo­ple have dis­cov­ered that cars are a costly has­sle, and they live just fine with­out them.

The cost of start­ing benef its early

Dear Liz: I started get­ting So­cial Se­cu­rity at age 62. I would have got­ten only $327 a month based on my work his­tory, but they gave me $666 based on my hus­band’s work his­tory. He gets $1,966 but your ar­ti­cle said I should get half. Should I be re­ceiv­ing more?

An­swer: Prob­a­bly not. Your spousal ben­e­fit would have been half of your hus­band’s “pri­mary ben­e­fit amount” only if you’d waited un­til your own full re­tire­ment age to ap­ply. Be­cause you started sev­eral years early at 62, your check was re­duced by 30%.

His pri­mary ben­e­fit amount is what he would have re­ceived if he started ben­e­fits at his own full re­tire­ment age. Full re­tire­ment age is cur­rently 66 and will rise to 67 for peo­ple born in 1960 and later.

Bar­bara David­son Los An­ge­les Times

A PER­SONAL auto pol­icy might not even cover your own car if it were used mainly for busi­ness. Find­ing an in­ex­pen­sive car may be a bet­ter op­tion. Car com­par­i­son site Ed­munds has ad­vice for find­ing re­li­able ve­hi­cles for $2,500, which it says is a rea­son­able bud­get.

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