Lawyer Advises Me to Purchase a Vehicle???

What do you make of this... I went to a very well known bankruptcy attorney, large firm, etc. After calculating everything up, re-checking the numbers he advises me to purchase a used vehicle with a payment between $450 and $489 per month.

His explanation is that Schedule I minus Schedule J had too much disposable income left over, even though I met the median income.

One of the reasons for this bankruptcy is to get all the debts and bills off my back. There isn't any doubt that I could pay some of the bills but certainly not all of them.

The filing is going to be a chapter 7, and I'm giving back the house. Any information is appreciated. I want to learn a lot from this process.

It sounds as though your attorney is trying to prevent your case from being converted to a Chapt 13. With that much disposable income/month, it is more than likely you will be forced into a 13.

Far better to purchase a vehicle, which is an allowed expense and be paying for something which will be an asset to you, rather than using that money to be in a Chapter 13 for the next 5 years, and sending that monthly payment to the trustee.

Sounds like good advice to me. That being said, I'm NOT an attorney, so others can chime in here, and I'm sure they will.

PS: just re-read your post. I see you met the medium income, so I'm not sure why there should be a concern about schedules I & J? Others can chime in....is this because you are right at the high end of median income?

K

I agree with your attorney. When I was sinking in the bk quicksand back in 2006, I decided that buying a vehicle was the best thing to do. At that time, I did not know whether I would be forced into a chapter 13 or be allowed to do a ch 7.

Since I knew bk was likely going to happen, I knew my credit would be damaged and getting a good car at a good rate would not be possible for a few years. So, I bought one and am glad I did. Now, my credit scores are on the rise and I plan on having scores good enough for 6% or lower interest rate when I buy again in about 3 years or so. My old car, the one I traded in to buy this one, would never have lasted until 2010 or later.

So, go for it. You can always say that your old car was falling apart and breaking down, which I'm sure it may be doing. As long as your new car is not a BMW or Lexus, and monthly payments are below $500/month, you should not be challenged on it.

Heed your attorney's advice, do what he says, and you should be ok - in and out of the chap 7 in about 120 days.