Is financing a vehicle just before filing considered fraud?

[woodburner]

I plan on filing chapter 7 in July. I will be using federal exemptions and filing jointly.

I own outright a diesel pickup with a KBB private party value of $21K. I would like to sell the truck and finance a much cheaper vehicle.

Is financing a vehicle just before filing considered fraud or otherwise frowned upon by trustees?

[UhOh]

I am by far no expert and can not begin to help with the status of your current truck and related exemptions. I can tell you this: three of the four attorneys I interviewed before choosing said I should go get a new car right now before filing.

The thought was that I have a year left on my lease car and so I will be in the market a year from now anyway. With the BK, I will be in seriously high interest rates next year. So they said go finance a new car now and it will be net zero or upside down as you drive off the lot. You can list it and reaffirm the loan and then you have a new car/new car payment for 5 years. Not fraud because you intend to pay for it as promised. Then let the lease default with the BK and they can come get that car back.

So, like everything, it depends.

[BKParalegal]

Not if it is for a reasonable or necessary car. I had a client buy a $70k jag right before filing. To say the least, their BK was dismissed by the court. Other than doing something stupid like that, you will be fine.

Good Luck

[woodburner]

Thanks UhOh and BkPara that feedback really helps.