Hearing on New Car bought before filing?

[mkscss]

We filed chapter 7 bankruptcy June 4th. We had a car and atruck that we were going to reaffirm.Two weeks prior to filing our attorney called us and advised us to put the leased truck in the bankruptcy and buy a new one. We discussed it and decided to put the lease in but instead of strapping ourselves with another truck payment, we traded our car in on a ne jeep wrangler that could serve as both family vehicle and "truck" my husband could use for his job. Down to one payment and less insurance and gas (we both work at same company). Kept us within our budget. Now we have just recieved a notice of a hearing to determine whether our bankruptcy should be dismissed because of the timing of the purchase! I can't believe it, we dotted every i and crossed every t and consulted our attorney on every move. I don't understand....what could happen at this hearing?

[lrprn]

Now we have just recieved a notice of a hearing to determine whether our bankruptcy should be dismissed because of the timing of the purchase! I can't believe it, we dotted every i and crossed every t and consulted our attorney on every move. I don't understand....what could happen at this hearing?

You did buy the new car before you filed, didn't you? (Please say yes.)

Who filed the objection that led to the hearing? The car lender? Your trustee?

Any reason why you chose to buy a new car rather than a serviceable used one?

[Cali]

I hope they bought it before they filed.

[mkscss]

We bought the car 4 days before filing at the advice of our attorney. He advised us to buy new. We are reaffirming it and the objection is not from the lender it is from the bankruptcy court.

[Martha13]

Holy Cow! Is this a hearing separate from your 341 meeting? Why on earth would your atty advise you to do that? Our atty very specifially told us he could NOT advise us to take on any new debt prior to filing (and this was directly related to the concept of including other cars in bk, and buying new ones.) I will say, however, that he wasn't saying not to do it..it was a "read between the lines" kind of moment. We did something similar, but slightly over a month prior to filing, and made a couple of car payments already, and ret'd one car, will return the other next week when the company will finally agree to take it back (they wouldn't w/out a case#, we are filing Monday). Will your atty represent you at the hearing? Do you have any kind of documentation of his advice? Will you have made any new payments on the jeep prior to the hearing? Have you turned in the old lease yet? Jeepers. It must be the "4 days prior" that's caught their eye, but it sure sounds like you did it for the absolute right reasons. Please let us know how this pans out for you, ok? Hopefully all will be well.

[Help!]

mkscss, is the objection from the US Trustee or the local trustee? You were given lousy advice (you're certainly not alone - we did exactly the same but paid cash from our 401K) and you weren't aware that you were doing anything wrong. Just be honest and explain your rationale... that this was a decision you made to decrease your transportation costs (and have some numbers/documents to back you up). If there's still skepticism that you knowingly engaged in a purchase "on the eve of bankruptcy", you might consider offering to hand over the car as a gesture of good faith.

[AngelinaCat]

I think your attorney must be related to ours. UGH!!!

[liz417]

Hi there,
We are going to file ch 13 (hopefully) in Aug., and our attorney advised us to get a new car too. I had an old 1995 truck and she said that if we took her advice, then she would just "push back" the filing date. I hope we don't run into any problems either!!!
It seemed weird to me, we finally get up the nerve to think about bk and then seek an attorney when we are dowe to our last dollar in credit (literally), she tells us to buy a new car!!! Couldn't bring myself to spend on a new car, so I purchased a reliable used car with an affordable monthly payment...

[sharksfan]

My attorney advised both my wife and I to purchased new vehicles. The first vehicle we owned outright and was worth $5500 (trade in and purchased used 2005 truck). The second vehicle we were upside down by $15K and surrendered (purchased used 2006 small suv).

The trustee questioned us as to why we had ownership of 3 vehicles at our 341. I gave him a breif run down... his response was 'that makes sense' and we moved on.

All of this was done 4 weeks prior to filing.

[Martha13]

[liz417]

Re: Martha13

Thank you for your response. Now that I think of it, my attorney didn't "advise" me to get a new car, she bascially was concerned about the reliablity of my old car and said that we needed to "prepare" for the next 5 years because I will not be able to get any credit/loans and that the three of us (trustee, her and I) will be "married" for the next 5 years...

[PaKettle]

We filed chapter 7 bankruptcy June 4th. We had a car and atruck that we were going to reaffirm.Two weeks prior to filing our attorney called us and advised us to put the leased truck in the bankruptcy and buy a new one. We discussed it and decided to put the lease in but instead of strapping ourselves with another truck payment, we traded our car in on a ne jeep wrangler that could serve as both family vehicle and "truck" my husband could use for his job. Down to one payment and less insurance and gas (we both work at same company). Kept us within our budget. Now we have just recieved a notice of a hearing to determine whether our bankruptcy should be dismissed because of the timing of the purchase! I can't believe it, we dotted every i and crossed every t and consulted our attorney on every move. I don't understand....what could happen at this hearing?

Man, that really SUCKS. I feel for you.
I am no expert but I agree with your attorney that it seems like a reasonable thing to do. I'd have advised buying a good used one instead of new, but sitll, these days sometimes it's better to have a good, new reliable car wtih a repair warranty (in my humble opinion).

I sure hope they do not dismiss your case for doing this. Maybe you can just REAFFIRM the loan? Or give them the car back...?

See if you can show how this actually puts you in a better financial position and that you have every intention of continuing to pay off the car and will reaffirm.

Good luck and please post how it comes out. I have a feeling you'll be able to work something out. It doesn't seem like such a terrible thing that you did...

[mkscss]

Just an update: went to the hearing on Monday. Met with the lawyer first. He said it could go either way, depending on what mood the judge was in, but he thought we were okay. And we were! We did not have to speak. Lawyer explained the reason for our purchase and the judge basically said that he was just not sure about it and just wanted more explanation and accepted the reasoning....what a relief! I told the lawyer thank you for your help, but i hope I never see you again! So hopefully we ae on our way to discharge with no other bumps in the road!

[Martha13]

WAHOOOOOOOOO !! So very glad to hear it went well, and no more stress on that issue...yay!!

[JRScott]

Congrats