Have to buy a car before BK

[fabala]

I'm going to file Ch 13 in Florida during the next month or two. I have retained an attorney. Unfortunately I am in a position where I need to replace my car before I file. My attorney said that she can't legally tell me it's OK to do this, which I understand, but to do what I needed to do.

I went to talk to a car dealer today (I told him the truth about impending BK) He said he found someone who would finance a new 2007 lower-end car for me at 16% interest for 60 mos. My intention was to purchase a 2005 or 2006 with some time left on the warranty. However, the deal he presented looked good with rebates, dealer "perks," etc. And the thought of the full warranty through my BK is very comforting.

He said that a used car would have a higher interest rate (22%), no rebates, no dealer "perks", less time on warranty.

I know he's a salesman and will make more $ on a new car. However, I feel like he had some valid points.

My main concern is how it's going to look to the trustee if I come marching into BK court having just bought a brand-new 2007 car, albeit a lower-end car. Has anyone on the Board every done this? I do have receipts and quotes to show that it is necessary to replace my current car. But frankly it does not need to be a brand new car. But with interest, a used car payment will be about as much as new car payment.

It just seems to make sense under the circumstances to buy a slightly older car, even if I don't get all the "perks". I do understanding that the "perks" are folded one way or another into the new car loan, but they look nice because they're maintenance items I won't have to pay out-of-pocket for a while.

I just keep thinking that if I weren't facing BK right now, I still probably wouldn't buy a brand new car. I'd get one a few years old. But since I'm neck deep in unsecured debt, I don't consider myself a financial genius, hence my questions.

Anyone care to weigh in on my delimma? Thanks.

[DebtOstrich]

Bought a Car Right before Filing

I just want to let you know we bought a brand new car 3 weeks before we filed. We live in Illinois so the laws might be different. We wanted to make sure we had a reliable car that would last through the bk. Although our lawyer also could not advise us, he did tell us as long as we planned on making the car payments we would be fine. One bit of additional advice I would give you is not to mention to any car dealer you are going to file bk. No one but your lawyer needs to know. We did not tell anyone and got a pretty good interest rate. One other thing I need to mention is we actually lowered our car payment about 20 dollars a month. That will make a difference with our trustee. I'm not sure if that will work in your case as you did not mention what if any car payment you currently have. I hope this helps, best of luck to you no matter what happens.

[aa06a47]

Definatly don't tell a car dealer your about to file bankruptcy. He used that information and offered you a 16% interest rate and made you think he was doing you a favor...not.....try looking at a few dealers. Many are offering 0% financing and as long as you have not filed yet, there is a chance you might get it....at least get a rate in the single digits. I understand Ford Credit is bk friendly.

[fabala]

Today I got a Capital One Blank Check in the mail that I applied for. Much better rates than the dealer quote - 12.45% for 60 mos. However, one of the terms states that they can repo the car if you file BK. I searched the forum and found most people using the Cap One Blank Check used it after discharge. Has anyone had experience using the Blank Check before or during an active BK? I don't want to go through this just to have my car repo'd.

[coma]

I don't have any experience with Cap One, but if you file, the automatic stay is in place, and they cannot just repo. They would have to go through th court and file a motion to lift the stay so that they can repo it. If you are current, you can reaffirm the loan and keep the vehicle.