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Purchasing a Vehicle before Filing Bankruptcy

Clients often purchase vehicles before filing bankruptcy. Often this additional, necessary expense allows a client to pass the Means Test for a Chapter 7 or lower a Chapter 13 monthly plan payment. A car loan is a secured debt as it is secured by the vehicle to which it is attached. Clients often assume that their loan is secured when they drive their new car off the lot. However, the creditor must perfect the lien by filing it with the Department of Motor Vehicles in order to provide third parties notice of the lien on the vehicle. In order to properly perfect the lien, it must be filed within thirty days after the purchase of the vehicle.

Clients often purchase vehicles before filing bankruptcy. Often this additional, necessary expense allows a client to pass the Means Test for a Chapter 7 or lower a Chapter 13 monthly plan payment.

A car loan is a secured debt as it is secured by the vehicle to which it is attached. Clients often assume that their loan is secured when they drive their new car off the lot. However, the creditor must perfect the lien by filing it with the Department of Motor Vehicles in order to provide third parties notice of the lien on the vehicle. In order to properly perfect the lien, it must be filed within thirty days after the purchase of the vehicle.

If the lien is placed more than thirty days after purchase of the vehicle, and a bankruptcy case is filed within ninety days from the date of the placement of the lien, the Bankruptcy Trustee has the power to strip the lien and sell the vehicle. A client going into a Bankruptcy generally needs their vehicle to get to and from work, school, medical appointments, or other important destinations, and obviously, losing their new vehicle would be a substantial blow to their wellbeing and livelihood. A knowledgeable Bankruptcy attorney is always on the lookout for this situation and will likely advise a client to wait ninety days from the placement of the lien before filing their Bankruptcy case.

If you are considering purchasing a vehicle before filing for bankruptcy, contact O'Bryan Law Offices today to schedule a consultation with one of our experienced bankruptcy attorneys. Call us today at 502-400-4020 for a free bankruptcy consultation.

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