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Member
ForeverAng
Posts: 10
Registered: ‎01-24-2012
0

SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP

I currently have a vehicle and I am in the middle of my Chapter 7. My current vehicle has problems not to mention I am upside down on it has a high interest rate etc and not worth it to keep it. I plan on surrending it. I have been aprroved at 2-3 places to buy another vehicle. One is a very reliable SUV with 40k miles on it the interest rate is like 20%. I need a car if I am going to surrender my old one. The payment I can handle. BUT my thing is should I go ahead and buy this car and refinance or trade it later with a better interest rate? Or should I just rent a car until after my discharge for awhile and THEN buy a car after discharge? Advice please?

Pre BK Score- 538 as of 1/2012
Goal Score: 700+
Established Member
sprint100
Posts: 12
Registered: ‎11-28-2007
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Re: SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP

I did that after being advised that it would be OK. I'd check with the attorney handling your BK, but just be diligent about being on time so you can either refi or get a loan with a better rate in a year.

Moderator Emeritus
llecs
Posts: 32,869
Registered: ‎08-04-2007
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Re: SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP

My vote is to pay the one you have now. Surrender = repo if I understand the terminology correctly. Also, the down payment on a new used car could easily knock down the balance on the old. And all car purchases will result in being upside down if financed. Cars down appreciate after purchase. You'd be upside down on the new one too, plus you'd still owe $$$$ on the old. You have to pay the difference between what they sell it for at auction minus the balance due. You are better off selling it and getting a small loan to cover the deficiency.

 

Don't rent. I did that for months on end after both of our cars died within days of each other and I didn't want to finance anything at the time. I got some great deals as a volume customer but the cost was easily 3x the cost of a car payment.

Member
ForeverAng
Posts: 10
Registered: ‎01-24-2012
0

Re: SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP

I think you misunderstood. My current car is expensive an old BMW and it has no AC and some problems.I have the chance to include it and surrender it bankruptcy. I also have a deal on a rental for the not much more then what a car payment would be each month. The new car I was approved for is low mileage and they are selling at NADA trade in value..the finance rate is high but the car is only 11,900.

Pre BK Score- 538 as of 1/2012
Goal Score: 700+
Member
ForeverAng
Posts: 10
Registered: ‎01-24-2012
0

Re: SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP

oh and i wouldnt owe money on the old if i surrender it.

Pre BK Score- 538 as of 1/2012
Goal Score: 700+
Moderator Emeritus
llecs
Posts: 32,869
Registered: ‎08-04-2007
0

Re: SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP


ForeverAng wrote:

oh and i wouldnt owe money on the old if i surrender it.



Gotcha. That's why I inserted that seed of doubt into my post. I thought there might have been implications by returning it.

Member
ForeverAng
Posts: 10
Registered: ‎01-24-2012
0

Re: SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP

oh ok no.So what would you suggest?

Pre BK Score- 538 as of 1/2012
Goal Score: 700+
Established Contributor
pipeguy
Posts: 828
Registered: ‎10-31-2011
0

Re: SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP

Ethical considerations aside, wouldn't it be an issue on a pending chapter 7 that you have enough liquidity to purchase a car before your debts are discharged?  I understand that your current cash flow has improved due to the pending BK freezing your monthly obligations, but still....

 

If it was me I'd wait until after the Chapter 7 was final, then another month and then maybe look for a cheap used car not one at 20% APR.  

Member
ForeverAng
Posts: 10
Registered: ‎01-24-2012
0

Re: SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP

a month after discharge wouldnt i still get a high interest rate? And in the meantime should i jst rent a car? Im sure they will come get the car once I file to surender it.

Pre BK Score- 538 as of 1/2012
Goal Score: 700+
Established Contributor
jimbo831
Posts: 977
Registered: ‎02-08-2012
0

Re: SHOULD I BUY CAR WHILE IN BANKRUPTCY?? HELP


ForeverAng wrote:

a month after discharge wouldnt i still get a high interest rate? And in the meantime should i jst rent a car? Im sure they will come get the car once I file to surender it.


I think by "cheap used car," he meant buying a cheap one with cash, as opposed to another used car, with no warranty, where you still owe over $10k and are paying an extremely high interest rate.  Perhaps save up for a month or two and buy a decent $2k-$3k car.  You can find plenty of reliable old cars in this price range.

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