Q: I am filing Chapter 13 in NC. Can I buy a used car with Unemployment proceeds and keep it after the bankruptcy?
I am collecting Unemployment benefits under the CARES Act. This includes both State and Federal compensation. Can I use both the State & Federal Unemployment income to purchase a used vehicle (for $4,000 or less) and be assured the court cannot take it after the bankruptcy? I was told by my attorney they can't take it if I use ONLY State benefits, but what if I use both State & Federal money? I get 1 weekly deposit (on a State issued debit card) for the combined total of both State & Federal income. It is not broken out between State & Federal benefits and I have not comingled any other monies on that card. I voluntarily surrendered my vehicle to the creditor in April and I now have enough unemployment money to replace it. The sooner I can buy a car, the sooner I can obtain gainful employment again, get off the government's dime and get back to work. Can I used the State issued debit card to purchase the $4,000 vehicle?
A: I would not buy it until after I filed bankruptcy. That makes it a postpetition purchase. If it is purchased using CARES money you should be fine. Also, you have exemptions you can use to protect t the money or the car from being seized.
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