Buying brand new car before filing?

[Poppie]

I have an older car with high mileage that needs about $650 in repairs. I'm upside down on it by about $5000. The gas mileage on it is terrible. I'm planning on filing bk7 in about 4 to 6 months and including this car in the bk since I can't sell it and don't want to roll over the $5k in negative equity in a new loan.

Because all my car loans have perfect payment histories, I can qualify for a pretty decent new car loan rate right now. I'd like to go ahead and buy a new, but CHEAPER car with better gas mileage now before my credit is ruined by the bk. Then I'll just stop paying on the other one a couple of months before I file. I want to obviously keep the brand new car. It will have a lower payment and will cost me less money in gas each month, so in the end it will be better on my budget as I try to recover from the BK.

Is this a wise move? I'm hesitant to buy an older car because the rate will be higher and the car won't last as long. I hope to keep the new car a minimum of 7 years, but with an older car I won't be able to do that.

I have not hired an attorney yet but will start interviewing them in a couple of weeks. I just thought I'd check here first. Thanks!

[Minnymouth]

Buying a newer auto, with cheaper payments , and low gas useage before filing BK is not uncommon. Expecially if your present one is a gas gussler, and you are upside down on it.

Personally, I would go ahead and do it while my credit is still in tack enough too. And then turn the other vehicle back in during the bankruptcy. Just allow at least 90 days or more to pass before filing bankruptcy. Any large purchases are questionable within the 90 days before a bankruptcy is filed, though I doubt they would question a better vehicle and one less expensive...

[Help!]

This is what we were advised to do also because one of our vehicles was getting expensive to repair and was on its last leg. The issue did come up at our 341 hearing and I'm glad we chose the car we did (a new Toyota Corolla) instead of the car my husband wanted to buy (a used Audi). Even though the Audi would have been a less expensive car, the perception would have been that we purchased a luxury car. The couple ahead of us at the hearing had an older BMW (probably worth a lot less than our new Corolla) but you could see the raised brow of the trustee and the looks around the courtroom. As long as you are prepared to explain your reasoning it does make sense, believe it or not.

[Poppie]

Great, thanks! I'm considering a Toyota Corrolla or maybe a Honda Civic, either of which will be so much easier on the budget than my big SUV.

[jenopher]

My atty said to go ahead do the exact same thing. We traded in our gas guzzling 2006 V8 Ford Explorer which we owned outright and split the cash on 2 cars. A new Camry and a 2 year old V6 Tacoma. We only had the Explorer before and an older street motorcycle, so now we have 2 reliable good cars to last us awhile. I think we will be able to keep the motorcycle, it's paid for, but it's our only asset, I hope so as it does get super gas mileage for hubby to get to work on nice days. It's just sooo nice to be rid of the gas monster and each have a decent car. I was usually the one that went without if hubby had to take a car to work.

[Cali]

I hear you I have a V8 SUV that takes only premium.
I am looking at Camry, Acura, or Civic.

Great, thanks! I'm considering a Toyota Corrolla or maybe a Honda Civic, either of which will be so much easier on the budget than my big SUV.

[jerryklarke]

Hello everyone, I need to apply for a loan, and I will have a cosigner with excellent credit (my dad). I know it varies from place to place, but in general, will I need to have worked at my job for a certain amount of time before I can get a loan? Also, can I put down what my parents give me as additional income when applying for loans? Thank you very much in advance.

[kingofsnakes]

probably it's too late to jump into this discussion, but i also got a new car recently, and going to file chapter 7 as soon as i can... i used to drive 2003 Lexus, now i got 2006 BMW 325, which has $100 a month larger payment than i had for Lexus, but BMW is low mileage, still on manufacturer's warranty, and is also a certified preowned car, which willl cover it up to 100,000 miles, that was the main reason for getting BMW.. + it has way better gas mileage than Lexus.. an addition to that BMW had a special program that offered all 2006 models with low promotional APR, and overall it was a better deal than i was getting at Toyota and Honda with my mediocre credit score..

i don't know if these reasons would be enough for trustees, but they it is enough for me...

i only wonder now how long i need to wait after purchasing a car till i can file chapter 7 ?

please share yough thoughts with me.. thank you

[aces67]

My cousin filed BK and her lawyer actually advised her to buy a new car before filing. She did and everything went great after that.

[Moneypenny]

i want to know about this too. i want to buy a car, increase auto insurance, take out some life insurance, etc. 7 months before filing. I wonder if this will fly...

And if not, what does the ch13 expect of me? that i stop making the car payments, cancel insurance, etc.? Once I aquire expenses, what am I supposed to do with them?

Lets say I got the BMW like the other guy: what is he supposed to do, stop making the BMW payments?

ever thankful,
MMP

[kingofsnakes]

in my other thread someone just wrote a very scary thing that i haven't heard before:

http://www.bkforum.com/showthread.php?t=42992

what is this "preference/insider payment" ?

is this true ?

[HakunaMatata]

Have you considered trading in your car? I know you have negative equity; although, some dealers are beyond willing to give you what you need. I recently negotiated a ridiculous amount for my trade. I brought hard numbers to the table and I walked...only to find the dealer chasing after me!

My consult attorney advised me to secure a vehicle (less than two years old) prior to BK. He said he doesn't recommend anyone keeping a vehicle that is older than 2-3 years (warranty was a major reason).

[kingofsnakes]

yes, i considered trading it in, but i was offered 60% of its market value, way less than i owed the bank, so i had to sell it..

but then someone wrote this to me:
Quote:
Originally Posted by keepmine
You got all manner of problems.
The money you returned to your friends is a preference/insider payment and the trustee will go after your friends for the money.

this sounds scary... could you tell me more about this ?

i couldn't sell my car because buyers wanted to get title immediately, and bank had the title, i lost two buyers like that, i have just $1500 in my checking account at best, and it was impossible for me to get the title on my own.. i took $12,000 from my friends, put it in my checking account, sent personal check to financing company, and they sent me the title.. after i sold the car i got cash from the buyer, and returned most of it to my friends, minus the downpayment for the car... i never had any money, and i still don't, i just have a car payment...

am i in trouble now ?

[Amy26]

I bought a 2009 Corrolla 3/31 before I filed and it was not a problem. I financed through Toyota and I actually had not even started my job yet. I gave them my offer letter and that was sufficient. However, I had really great credit history through Toyota.

[whipster1]

am i in trouble now ?

Not now, but if you file, all of those transactions will probably be undone by the trustee.

You gotta wait a year or so.