Can I buy a new car if I just filed for a Chapter 7?

UPDATED: Jun 8, 2011

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Can I buy a new car if I just filed for a Chapter 7?

Among my debts I have a loan on a car that I cannot pay so the bank is going to take. Now my job depends on the car. I cannot work without one and my friend is going to help me to buy another. It is OK to buy one now?

Asked on June 8, 2011 under Bankruptcy Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

You legally *can* buy the car, but as a practical matter, may not be able to do so--and perhaps should not do so.

1) Unless it's an all cash purchase, it's difficult to imagine you'd get any financing after having filed.

2) You will have to disclose the car as an asset and the purchase thereof in your bankruptcy; therefore, the fact that after defaulting on one car you bought another will be something before the bankruptcy trustee and court as they consider what to order in your case.

3) As an asset of yours, the value of the car will be taken into account in determining what you can pay creditors.

4) It's not impossible the car will be liquidated as part of the bankruptcy to pay creditors as much as possible.

You may wish to consider other options, if at all possible.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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