Bankruptcy and buying a vehicle
Florida residents who are considering filing for bankruptcy to handle their debt and are hesitant to purchase a needed vehicle may benefit from learning that under certain circumstances they might be allowed to do so. However, they should be aware that they would be able to retain the vehicle only if it was a necessary purchase.
Most states allow individuals who file for Chapter 7 to keep their vehicles if the equity is below a certain amount. The vehicle will be considered an exempt property and will not be required to be sold with the proceeds going towards creditors. However, cash in a bank account is rarely protected by exemption laws and is likely to be seized for a Chapter 7 bankruptcy. In order for individuals to pay cash for a vehicle before filing for bankruptcy without causing concern, they should make sure that they can prove it was a necessary purchase.
Obtaining new debt right before filing for bankruptcy is usually not advisable, but for individuals who lack the cash and absolutely require a vehicle, getting a loan may be the only avenue. For Chapter 7 filers it can also be beneficial if the auto loan is allowed to be deducted for the means test enough to lower their income so that they qualify for bankruptcy.
Bankruptcy is a legal process that individuals can used to resolve a significant amount of debt. This may include medical debt and credit card balances. A bankruptcy lawyer may evaluate a client’s financial situation and advise whether filing Chapter 13 would be an available option.