Many people choose to file for bankruptcy when their financial situation becomes overwhelming. A Georgia Chapter 7 bankruptcy can help in this situation, as it allows for the filer’s debts to be discharged. This gives the filer a fresh financial start—they are able to move forward in life without the stress of crippling debt.
A Chapter 7 bankruptcy is often referred to as a liquidation bankruptcy. This is because in a Chapter 7 bankruptcy, the filer’s assets are given to the bankruptcy trustee and then liquidated, or sold, to pay back debt creditors. As a result, if you already have a car, you may be required to surrender that asset and others to your trustee. If you don’t already own a car, but need to buy one, it is important to know when you can buy without it having consequences on your bankruptcy.
Here are a couple things you should know about buying a car and bankruptcy:
- Be Careful When Buying a Car Right Before Bankruptcy: If you are planning on filing for bankruptcy, you need to be cautious about buying a new car. Going further into debt right before bankruptcy can lead to questions about fraud and your bankruptcy could be objected to or dismissed. If you need to by a car before filing for bankruptcy, consider buying one that is more economic and would not require a loan or only requires a small loan. This way, it may be possible to exempt your car from being taken and sold and you can sign a reaffirmation agreement to keep your car. If your car is too expensive or your loan too large, your car will likely be sold by the bankruptcy trustee to pay back your creditors.
- Buying a Car After Bankruptcy Is Possible: Some people worry that filing for bankruptcy will prevent them from purchasing a car for a long time afterwards. This can be particularly concerning if you need a car to get to and from work so you can avoid future financial issues. Luckily, you can often qualify for a car loan very soon after your bankruptcy is discharged. Although the interest rate on the loan may be higher, it is still possible to get a loan for your car. A recent bankruptcy discharge means you cannot file again for years, so a creditor is generally willing to approve your loan, allowing you to get a car after your discharge.
Get Your Bankruptcy Questions Answered
Having a car, and the ability to buy one when you need to, is very important. If you are thinking about filing for bankruptcy and have questions about when to buy a new car, if you will be able to keep your car, or if you will be able to qualify for a car loan afterwards, reach out to an experienced Georgia Bankruptcy attorney at The Ballard Law Group. We offer a free initial bankruptcy consultation so you can get the answers to your questions about how bankruptcy would impact your personal situation. Call us today at 404-220-9906 to schedule your free initial consultation at either our Atlanta or Lawrenceville office.