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Should I buy a new car before I file chapter 7 or afterward?

Atlanta, GA |

I have a car that I owe 21k on. My payments are high and I plan to let the car go back in the chapter 7. I have some money saved to buy a used car cash but Im wondering should I file first then buy a car or should I wait until after I file?

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Attorney answers 4


It depends a bit on what type of car you are looking to buy and how much money you have saved up.
Check with a GA attorney for what types of exemptions are allowed in your state, but most states allow a few thousand in equity to be exempted for your vehicle.
If you have too much free cash when you file bankruptcy though, the trustee will take it to pay your creditors.
Your best option is probably to get the bank to take back the car you currently owe money on, and then buy a new one that is not of too much value. After that you can file chapter 7. Please speak with a GA attorney for the state specifics however.


I often advise people to buy & finance a car before they file in order to help them pass the Means Test. If you are considering buying a car for cash, you will want to be sure that the value of the vehicle is protected by the state's exemptions. Most states have state laws posted on the state website, & you can look at what exemptions are available for an automobile.

What you should do will depend on your specific circumstaces, I suggest consulting with a local bankruptcy attorney.


Whether you should buy it now or later depends on the price of the car being purchased and the value of your other assets. My suggestion is that you meet with a lawyer and then decide the timing on the car purchase. I'd be glad to review your case to decide when to file and offer reasonable Chapter 7 fees. Call me at 404-768-3509.


You need to consult with a bankruptcy attorney and discuss the possible risks of incurring new debt before filing for bankruptcy if you intend to finance a used car.

If you are going to pay cash for a used car, you need to determine whether the car is exempt from seizure under the exemptions laws that apply to bankruptcy in your state.

The information provided is not intended as legal advice. No Attorney/Client relationship is intended, implied or created.