buying a car before filing chapter 7

[mcduffy13]

I was going to file a chapter 7 in September, if I traded my car in now for a newer one would that raise any red flags before I filed in a few weeks

[bcohen]

As long as you could reasonably afford the new car based on your current income, buying the new car now would not be a problem. In fact, many attorneys advise clients who are borderline on passing the "means test" to replace an older, paid-off car before filing so that the car payment expense allows them to qualify for Chapter 7. Of course, if you are well below your state's median income for your family size, and your current car is in good condition, then buying a new model might be a waste of money.

With proper maintenance, a modern car should be able to last for 20 years or more. Even when costly repairs are needed, it is generally cheaper long-term to keep an older car running than to pay for higher insurance, depreciation, and loan interest on a new car. For example, we had to replace the automatic transmission in a 1991 Camry back in 2002. It cost over $2000 to do that. However, we were able to squeeze another 5 or 6 years of use out of that car, which more than compensated for the cost. Had we junked the car instead, and bought new, we would have surely paid over $10000 in depreciation, higher insurance, and interest over those 5 to 6 years.

[keepmine]

It's pretty standard advice around here to get your transportation needs taken care of prior to filing.
Just be sure the new ride does not have more equity than your state exempts.

[justbroke]

So long as you can honestly say that you didn't purchase the car because you were filing bankruptcy and can articulate that you needed a newer reliable car, it's no problem!