You can buy a new car even though you are filing Bankruptcy (assuming, of course, that you can make the car payments).
First of all, if you are going to file a Chapter 7 Bankruptcy, and know that you will need a new car in the immediate future, it’s perfectly legal to buy one before you file. You have to make the payments on the vehicle, and you shouldn’t use credit cards or borrow money to buy it, but if you have the necessary down payment and the wherewithal to keep up on the monthly expense, than there is nothing wrong with the purchase. The car will become property of the bankruptcy estate so if there will be equity in it, check with your attorney to make sure that it will be exempt.
If you’re in a Chapter 13 bankruptcy and need a new car, you will have to get the approval of the court to incur new debt. For ordinary expenses like a vehicle, this is a fairly routine matter: it happens to the majority of debtors in a Chapter 13.
If you’ve already filed a Chapter 7 bankruptcy, and have exempt cash to buy a vehicle, you can do so immediately. You don’t need the court’s or the trustee’s permission or even to wait until the case is discharged.
So, don’t listen to anyone that tells you that it will be impossible to buy a car if you file bankruptcy. Just be sure to check with a competent bankruptcy attorney as to the specifics in your state.
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Last modified: March 22, 2009