QUESTION
Can I buy a car with cash after 341 but before discharge?
Asked on May 30th, 2017 on Bankruptcy - New Jersey
More details to this question:
I am filing chapter 7. I have had my meeting of creditors already and there were no questions other than the routine yes/no. No creditors were present or represented. I own one vehicle outright and have another financed, which I am surrendering. I need to replace this car for my wife. I plan to purchase a car with cash, less than $7000 worth to be precise. My concern is that the trustee would be concerned that I use this cash for a vehicle rather than my debt obligations. Am I safe to make this purchase after the meeting, but before I receive my discharge? I know there is a stay in effect on the financed vehicle, but I would prefer to sort all of this out and return the minivan sooner than later. I don't want to buy a car and then have my bankruptcy challenged, and perhaps lose the car. If I have to wait until the discharge I will, but if I can do so safely now, that is preferable to me.
7 ANSWERS
Where did you get the cash? And more important, when did you get the cash? If you got the cash from earnings after the bankruptcy, no problem. If you got the cash from money you declared as exempt, no problem. If you got the cash from your secret hiding place, held before you filed bankruptcy, and did not tell the bankruptcy court about this money, big problem...as in go to jail problem.
Answered on Aug 17th, 2017 at 7:17 PM
1 Award
As long as you disclosed all of your assets when the case was filed and at your 341(a), then it is fine to buy a car for cash at this time.
Answered on Aug 17th, 2017 at 7:17 PM
Returning the car is fine, the underlying debt will still be discharged. As long as the funds used to buy a new car were disclosed in the filing and exempt you can buy what you wish.
Answered on Aug 17th, 2017 at 7:17 PM
Bankruptcy Attorney serving Madison, WI
at
Richard B. Jacobson & Associates, LLC
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Yes-so long as the Trustee has no claim on the money you are using to buy the car. For example, if you use post-petition earnings (which are not generally part of the bankruptcy estate, at least in Ch. 7), or money in the bank that you exempted. The Trustee and creditors have 30 days after the meeting of creditors to object to exemptions, although they rarely do. So you should wait at least that long if you are using money you have exempted. In a Chapter 13, especially if you are incurring new debt, you must notify the Trustee and get his or her agreement.
Answered on Aug 17th, 2017 at 7:16 PM
What is key is whether or not you listed the cash on your petition and whether it was legally exempt- meaning you were able to keep it. If you failed to list the cash at all it could be considered fraud and you could be denied a discharge altogether. Consult your bankruptcy preparer to be sure.
Answered on Aug 17th, 2017 at 7:16 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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I would strongly recommend that you wait until at least your counsel (or you if pro se) receive the Trustee Notice of No Distribution if you are not going to wait for the discharge.
Answered on Aug 17th, 2017 at 7:16 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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As long as the cash was earned after you filed or disclosed on your schedules, there is no problem with buying a car in a Chapter 7.
Answered on Aug 17th, 2017 at 7:16 PM