Legal Question in Bankruptcy in New York

Buying a New Car Prior to Filing Chapter 7
I am seriously considering filing for Chapter 7 bankruptcy as I have almost no assets and am over my head in debt. I realize that after filing it will be very difficult for quite some time to get a decent car loan. Therefore, I am contemplating buying a new car before I file and then protecting it in the bankruptcy so that I have reliable transportation for the next few years. My current car is not old, but is reaching the age where it will be going downhill in the next few years. Will purchasing a new car right before filing, if it's not a terribly expensive car, affect or in any way prejudice the bankruptcy proceedings?

Asked on 6/16/01, 1:08 pm

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Re: Buying a New Car Prior to Filing Chapter 7

I have even advised clients to do so

As long as there is not more than $ 2400

in equity in the vehicle (purchase price

less loan) there is no problem

The other question is what is to be done

with the old car If sold, the disposition

of the proceeds is subject to court

review care should be taken as to what

debts are paid with this money or, depending

upon other circumstances, maybe it can

also be turned into an exempt asset

Answered on 6/28/01, 9:28 pm

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