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Purchasing a vehicle during Chapter 7 bankruptcy

Filing for bankruptcy can have many different effects on the finances of the individual who files. Here in Kentucky and elsewhere throughout the nation, a certain amount of confusion exists as to how Chapter 7 bankruptcy actually works and what is (and is not) allowed. It is vital for an individual seeking bankruptcy to solve debt problems to understand the process, and how filing affects financial decisions.

For example, a common question is whether or not large purchases like a car are allowed when one files for bankruptcy. It is technically possible to purchase a vehicle while in a liquidation bankruptcy, but it may not be the best financial move. Chapter 7 bankruptcy usually lasts between three and six months, and during the process, assets are being reviewed by the trustee to determine what can be liquidated to pay down debt.

In some cases, a vehicle currently being financed could be considered exempt from the liquidation process, but for those seeking to purchase a new vehicle outright, financing can be hard to come by. An individual filing for bankruptcy is required by law to report any and all assets to the court, and if that individual has enough money to purchase a car, it could jeopardize the filing. Individuals who can reasonably pay down debt without filing for bankruptcy are expected to do so.

Chapter 7 bankruptcy is a complicated process that many people do not fully understand. Seeking out the support of a qualified bankruptcy attorney can help Kentucky residents gain a better understanding of their role in the process and what is expected of them by the court. The old saying "knowledge is power" is certainly applicable in this situation, because the more prepared an individual is at the outset of the bankruptcy process, the smoother that process can be expected to proceed.

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Law Office of Ginger C. Cord, PSC
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Lexington, KY 40507

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