I would like to trade a paid for car with a trade in value of approx. $17,000 for another car that would have a lien holder and assume the debt on the statement of intent. The allowable exemption is not enough to cover the actual value. What would be the time period before I file in which this would be a safe maneuver ? Also how many items can be listed on the statement of intent in which I assume the debt ?
Bankruptcy planning to maximize exemptions is permissible provided there is no attempt to improperly transfer assets to 3rd persons without receiving fair market value. In such a case, the trustee is empowered to file lawsuits to reverse the transfer(s) and get the property returned to the Bankruptcy Estate. Such transfers are considered fraudulent conveyances. Having said that, there is nothing to prevent a potential bankrupt from transforming non-exempt assets into exempt assets. In order to give you more specific, useful information, it is necessary I speak with you further. You can contact me by clicking the tab called "Contact this Lawyer" next to my response.
That is something you need to sit down and plan with the attorney you will hire to handle your bankruptcy. No uniform or standard rules exist for pre-bankruptcy planning maneuvers. Any timeline is specific to what it is the debtor is attempting to do and only an attorney that is privy to your entire financial situation can answer your questions.
If you don't hire an attorney, and you mess this up, your bankruptcy will cost you 2-4 times more than the relatively meager investment in an attorney to handle the case from the beginning. If you really mess things up, you could be denied your discharge. Which means that you will have filed bankruptcy, the trustee will take the asset you tried to protect, and you will still owe all the debt.
With your vehicle and wildcard exemptions, you can exempt approx $30,000. So unless you have substantial other assets you need to exempt, it doesn't appear that you would need to do what you are contemplating. Besides, if you trade in a vehicle worth $17,000 the new vehicle would still have $17,000 worth of equity unless you are relying on the drop in value when you drive it off the lot ... which has nothing to do with converting non-exempt assets to exempt.
I have advised clients to do a "trade-down, spend-down", but as other attorneys noted, this is tricky stuff.
you can do this; your "value" of the car is the NET value after subtracting the lien. I advise this as strategy when folks definitely need a newer car prior to taking the credit hit by filing bk. It is planning strategy and makes perfect sense. I wrote a book on pre-bk planning strategy. http://www.amazon.com/dp/1105130908/ref=rdr_ext_tmb
The foregoing is for informational purposes only and may not be relied on as attorney-client advice.