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Can I buy a car during bankruptcy?

On Behalf of | Aug 15, 2020 | Bankruptcy

Once you file for bankruptcy, you may feel a sense of relief. It can be the best possible move to make if you have serious financial struggles. Because of the automatic stay, it also provides you with at least temporary protection that can enable you to get your finances back on track.

One goal you may have is to secure a new vehicle. While you can try to buy one during your Chapter 7 bankruptcy, Car and Driver notes that it is best to wait until after your discharge.

Trustee issues

One of the main reasons to hold off on buying that vehicle is that your trustee may question the decision. If you have enough money to buy a car, then the trustee may see that as an issue. It could delay or even end your bankruptcy without a discharge.

If you buy a vehicle the trustee deems as too expensive, he or she could make you give it up. Depending on your case, you may be unable to exclude the new vehicle under exemptions.

In addition, a Chapter 7 bankruptcy usually does not take very long from start to finish. The standard timeline is six months. You should be able to figure out alternatives until your discharge so that you avoid any complications.

Benefits to consider

If you wait until your bankruptcy discharge, you can likely get a better deal. You should always watch for high interest rates, though, as many lenders will try to maximize rates due to your bankruptcy. It is smart to shop around for the best deal.

Buying a vehicle is a good way to rebuild your credit, but you need to be smart about it. Stick with a modest purchase and make sure you can easily afford the payments.