If I filed Chapter 7 shouldI purchase a new vehice for cash?

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If I filed Chapter 7 shouldI purchase a new vehice for cash?

The creditors meeting was held a couple of weeks ago. I will be surrendering my auto. My grandparents are going to loan me $16K to purchase a vehicle that I found. It will basically be a personal loan. So the vehicle can be seen as an asset. Can this be taken and used to pay debts that I filed on? Is there a better way to go?

Asked on February 27, 2011 under Bankruptcy Law, Ohio

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes...any assets you have (including a vehicle) will be considered during your chapter 7 bankruptcy and could potentially be taken, sold, etc. for the benefit of creditors.

Instead of buying a vehicle, you may wish instead to lease one, and have your grandparents make the payments on your behalf. A leased vehicle is not your asset, so it's not something your creditors can take. And while you do not get any value or equity for leasing, there are some *very* good deals out there, for leasing new, but modest cars (especially if you can find a '10 model that's not yet been disposed of); or you could lease a pre-owned. You probably get something like a Nissan Sentra for $2,000 down and $90 - $100 per month on a 3-year lease--I know because that's what I have.


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