Kentucky Bankruptcy Law

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Chapter 7 Planning: Purchasing a car prior to filing

I spent two posts recently talking about purchasing a car prior to Chapter 13.  I want to touch briefly on the issue of purchasing a car just prior to filing a Chapter 7. I will not go into this with much depth because it is a fairly rare event. However, the main concern to keep in mind the timing of the purchase. If the lien is perfected within the ninety (90) days of filing the Chapter 7, you are running the risk of the trustee attempting to avoid the transfer (the perfecting of a lien is arguably a transfer) of the lien and thus have a potentially non-exempt asset that they can liquidate. Defenses come to mind as I write this, but few people filing a Chapter 7 can afford to also have litigation happen within the Chapter 7. So, the smartest course of action is to make sure all secured debts are perfected more than 90 days prior to filing Chapter 7.

October 2, 2013 - Posted by | Bankruptcy, Chapter 7, Exemptions | , , , , ,

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