How to Buy a Car During Chapter 7 Bankruptcy With Cash
Chapter 7 is a type of personal bankruptcy under the United States Bankruptcy Code. In a Chapter 7 bankruptcy, an estate is essentially liquidated by a Chapter 7 trustee. The trustee sells off assets of the estate and takes the proceeds to pay creditors. In a Chapter 7 bankruptcy, you may lose your house, car or any other asset. However, bankruptcy will not leave you unable to provide for yourself, so it is possible to purchase a car with cash during a Chapter 7 bankruptcy proceeding.
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Instructions
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Collect car documentation. In order to purchase a vehicle, you need to provide your Chapter 7 trustee with documentation pertaining to this car purchase. You must provide estimates for the cost of the new car. If you intend to trade in your current automobile, you need a value estimate of that vehicle. You also have to prove "need" to your trustee. You must have documentation showing that you need to purchase a car (or replace your car) during your bankruptcy proceeding. This can include repair estimates or an accident report if your car has been totaled.
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Contact your bankruptcy attorney. Your bankruptcy attorney can create the legal documentation needed to purchase a car during bankruptcy. Since your entire estate, including any cash, is under control of a trustee during bankruptcy proceedings, you will need permission from the trustee in order to purchase a car. Any money spent on a car during your bankruptcy will take away money from potential creditors, so the debtor will need to meet their burden of proof for the trustee. The trustee will give a recommendation to the bankruptcy court who will review the paperwork and make the final decision.
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Purchase the vehicle as proposed in your bankruptcy documents. Your trustee will provide permission to purchase a car using cash on hand. You must purchase the exact car you proposed for the exact price you agreed to pay. During bankruptcy you may not take out any loans or leases without permission from the court, if you do so, your bankruptcy case can be dismissed and thrown out of court.
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