Can I buy a new car if I just filed for a Chapter 7?
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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
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 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.
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