How to Purchase a New Vehicle Prior to Filing Bankruptcy
There are two types of personal bankruptcy under the United States Bankruptcy Code: Chapter 7 and Chapter 13. Both types of bankruptcy will potentially discharge any pre-bankruptcy debt. However, if you have sold or purchased any new assets--such as a car--within a year of filing for bankruptcy, that money or asset could potentially be included in your bankruptcy. Purchasing a new vehicle immediately prior to filing for bankruptcy can be risky, but is possible if you follow a few precautions.
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Instructions
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Determine if you have a reason to purchase a new vehicle prior to filing bankruptcy. The bankruptcy court consider if you have cause to buy a new vehicle. If your car is run-down, your lease is ending or your transportation needs have changed (such as having more kids to transport to school), you have a good reason to buy a new vehicle.
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Make a sensible vehicle selection. If you are having trouble paying your bills and intend to file for bankruptcy, do not make a luxury vehicle purchase. The bankruptcy court will determine whether you have made a luxury purchase or one based on necessity. While in bankruptcy, you must monitor your expenditures in order to maximize your payments to creditors. If you are making payments on any luxury items, the bankruptcy court may order you to sell the item as part of your bankruptcy estate.
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Purchase the vehicle as far in advance of filing for bankruptcy as possible. Preferably, make your new vehicle purchase at least a year before filing for bankruptcy. Keep all documentation from your new vehicle purchase to show the bankruptcy court. Keep any documentation from the vehicle you have replaced, including any repair estimates if you are replacing an older vehicle, or lease-ending documentation if your vehicle lease has ended.
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