Trading in cars before filing?

[twuoo]

I have two cars that are a little older. I was thinking of trading them both in for a newer model vehicle. Whatever vehicle I get would have to be less than $15K and I'm sure I'll be having a monthly payments on top of already trading in both cars.

Street value for my cars might be around $10-12K...MAYBE.

I'm in MI. Would this be a really bad idea in terms of exemptions or reaffirming debts?

I don't plan on filing until maybe Sept/Oct.

It'd be nice to have something newer and more reliable before I head down the bk road.

Would this raise any sort of flags for the trustee? I'd be a no asset case otherwise. The cars are the only things I have of any value.

[lrprn]

Would this raise any sort of flags for the trustee? I'd be a no asset case otherwise. The cars are the only things I have of any value.

If you are going for a Ch 7, if you can cover the loan cost with your motor vehicle exemptions, you should be ok.

In Michigan, you can use the MI or the federal exemptions. It looks like you only get a $1000 exemption for a car in MI - see Tools of Trade at http://www.bankruptcyinformation.com/MI_exemp.htm - it's the only place I see cars mentioned - plus there's no wild card either. The federal exemptions are much more generous - $2275 for a motor vehicle, and a wild card of up to $8,725 - see http://www.bankruptcyinformation.com/exemp-fed.htm . Looks like if you get a used car for less than $11,000, you can cover it with the federal exemptions when you file.

Of course the only way to be sure is to run this by a few bk lawyers in your area during your free consult visits to see how the 'car purchase before filing' winds are blowing in MI at the moment. Please come back and let us know what you find out - hope everything works out for you!