New Car?

[NeedNewStart]

I will be filing ch. 7 sometime in the future but I'm trying to make sure I have everything figured out first. My question is regarding my tax return.

I will be getting a $6000 tax return and I would like to use the money to buy and much needed new vehicle. I will be using Nevada exemptions, which allow $15000 in equity in a motor vehicle. My question is... how long should I wait between purchasing the vehicle and filing BK?

Thanks for any advice!

[lrprn]

As long as you don't buy a vehicle that's valued over $15K, you should be fine. Might as well do the deed as soon as you receive the refund to put as much time as possible between the purchase and filing (although it really doesn't matter much as long as the purchase is done and completed before filing). Be sure to confirm this with your lawyer BEFORE doing anything (if you are using one).

[spearmint]

As long as you don't buy a vehicle that's valued over $15K, you should be fine. Might as well do the deed as soon as you receive the refund to put as much time as possible between the purchase and filing (although it really doesn't matter much as long as the purchase is done and completed before filing). Be sure to confirm this with your lawyer BEFORE doing anything (if you are using one).

Why not over 15K?

[EricaCallaha]

Because you can only exempt $15K of the worth in your bankruptcy. You said it yourself with the Nevada exemptions. You don't want to go buy a car that you have to give back. It just defeats the purpose.

Good luck and have fun car shopping. I am jealous. I wish we had bought a new car prior to our filing. Just a great rush to file....

[spearmint]

Because you can only exempt $15K of the worth in your bankruptcy. You said it yourself with the Nevada exemptions. You don't want to go buy a car that you have to give back. It just defeats the purpose.

Good luck and have fun car shopping. I am jealous. I wish we had bought a new car prior to our filing. Just a great rush to file....

Is it $15K for every state? I am in Michigan.

[StartingOver08]

Is it $15K for every state? I am in Michigan.

No. Every state is different. Here is Michigan's exemptions:

http://www.legalconsumer.com/bankruptcy/state_bankruptcy_info.php?st_fullName=Michigan

Go to your area of Michigan to check your exemptions. I believe you have a choice between federal or state exemptions.

[spearmint]

No. Every state is different. Here is Michigan's exemptions:

http://www.legalconsumer.com/bankruptcy/state_bankruptcy_info.php?st_fullName=Michigan

Go to your area of Michigan to check your exemptions. I believe you have a choice between federal or state exemptions.

Thanks. All I can see is that the fed exemption of $3225 is higher than the state but I must be able to have a vehicle worth more than $3225? I can't see any other figures.

[StartingOver08]

This link is a little easier for you to read:

http://www.thebankruptcysite.org/exemptions/michigan.html

You have a motor vehicle exemption up to $3175 if you choose State Exemptions and if you choose Federal Exemptions you have $3225.

http://www.thebankruptcysite.org/exemptions/federal.html

You need to compare both Federal and State to determine which is best for you overall as you can not mix and match. You select which system you are using and then file with those exemptions.

[spearmint]

This link is a little easier for you to read:

http://www.thebankruptcysite.org/exemptions/michigan.html

You have a motor vehicle exemption up to $3175 if you choose State Exemptions and if you choose Federal Exemptions you have $3225.

http://www.thebankruptcysite.org/exemptions/federal.html

You need to compare both Federal and State to determine which is best for you overall as you can not mix and match. You select which system you are using and then file with those exemptions.

I think the exemption is applied to equity in the vehicle, isn't it? I am wondering if I get a car loan that is 18K will I be breaking the rules?

[StartingOver08]

Yes the exemption is applied to your equity only. So if you are upside down in a vehicle, no exemption needed. That is part of the BK planning. If you elect to get a 'new to you' vehicle with payments before filing, then your vehicle will most likely be upside down. It is not breaking the rules.

[spearmint]

Thank you! I just needed to know if there was a limit on the loan that I get. I didn't want to go out and pay 18K when I would have to turn it back in because it wasn't 15K. (I am just learning all about BK - before I file!)

[StartingOver08]

The amount you are allowed in your schedules for a vehicle payment is limited to X. I did not look it up for you, but you can check this link to see what the maximum payment allowed for vehicle expense in your district.

http://www.usdoj.gov/ust/

[spearmint]

The amount you are allowed in your schedules for a vehicle payment is limited to X. I did not look it up for you, but you can check this link to see what the maximum payment allowed for vehicle expense in your district.

http://www.usdoj.gov/ust/

Thanks. I looked at the link and it's like looking for a needle in a haystack. I wish people would write laws so ordinary people could understand them. I will study it further, though.