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new car loan prior to CH7
Dear Larry,
The U.S. Supreme Court answered your question in footnote 6 of Milavetz, Gallop & Milavetz, PA v. U.S., 130 S. Ct. 1324 (2010):
Thus, advice to refinance a mortgage or purchase a reliable car prior to filing because doing so will reduce the debtor's interest rates or improve his ability to repay is not prohibited, as the promise of enhanced financial prospects, rather than the anticipated filing, is the impelling cause. Advice to incur additional debt to buy groceries, pay medical bills, or make other purchases "reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor," 523(a)(2)(C)(ii)(II), is similarly permissible.
Good luck,
Nick
Nicholas Gebelt, Ph.D., J.D.
Certified Bankruptcy Specialist
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Law Offices of Nicholas Gebelt
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Good reminder from Jonathan. You may advise the client of the consequences of taking on new debt, while repeating before and after that you are not advising them to take on new debt. I usually say it at least ten times for every one time I discuss the consequences and then a few more times to burn it in the clients brain. It is sort of a variation on Nixonor us it is but I do not advise you to do so.
If you have any questions or concerns I do not advise you to contact me.
Pat
Patrick T. Green
Attorney at Law
1010 E. Union St. Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
Email: pat@fitzgreenlaw.com
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"..we conclude that 526(a)(4) prohibits a debt relief agency only from
advising a debtor to incur more debt because the debtor is filing for
bankruptcy, rather than for a valid purpose." Milavetz, 130 S.Ct. 1324
(2010) [emphasis added]
Hale
_____
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Larry:
I have done it with similar facts and never had a problem. If the need is
there and the client will continue to pay and has the income to do so, it
would be very hard to argue abuse successfully. Under the heading of pigs
get fat and hogs get slaughtered, make the car a modest one, not the
client's dream car.
If you have any questions or concerns please contact me.
Pat
Patrick T. Green
Attorney at Law
1010 E. Union St. Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
Email: pat@fitzgreenlaw.com
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Potential client has two old cars (1990s) and will need a newer car soon.
Also adding the car loan allows him to pass the means test. Is there an
abuse issue here? The need is real and very advantageous.
Best regards
Larry Webb
State Bar of California 229344
Central District California
"A Debt Relief Agency"
Larry@webbklaw. com
Law Offices of Larry Webb
484 Mobil Ste 43
Camarillo Ca 93010
P 805.987.1400
F 805.987.2866
C 805.750.2150
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