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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31789
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I live in AZ for 2+ years. I am filing chapter 7 bankruptcy.

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I live in AZ for 2+ years. I am filing chapter 7 bankruptcy. I own a car worth ~ 12,000. I would like to sell the car to a private third party and lease it back from the third party. I would like to take 7000 in cash from the transaction and apply to college tuition for preparing to re-enter the work force, dental work and home improvement projects. I plan on paying the 7000 back over 5 years via monthly payments. I currently work as a consultant providing computer repair work to residential people. I need to take some college classes to update my resume in order to get a job in my chosen field. Will the trustee have a problem with me converting the exempt asset into non-exempt asset in this manner? Will the fact that I do not have a job but paying on the loan cause an issue? I do provide computer repair support as a private individual and this provides enough money to pay the bills and the loan.

Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney here to assist you.


Usually, selling exempt property is not an issue when filing bankruptcy. The concept basically is that you were entitled to the exemption and the value of the exempt property, so if you convert the property into cash, you're in no different position - legally. Thus, if you're selling your car for fair value underneath the exemption amount, there should be no issue. Here's a link that explains this:


If you want to finance your vehicle for a loan of $7000, which is what it sounds like you want to do, you can do that as well. The third party would need to have you sign a promissory note for the loan, pledging the vehicle as collateral. Then, when you file bankruptcy, the third party would have to file a proof of claim and you could then reaffirm the debt during the bankruptcy. This would generate you some cash and would also allow you to keep your vehicle.

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