Depending on your Chapter 13 bankruptcy arrangements, you may find yourself without a car or, during your years of repayment, you may need a new car. … which often means a new car loan. Because a vehicle is often required for work or family purposes, you will have a chance to buy one if necessary. Here are the important steps in the process!
Find Experienced Lenders and Dealers
The good news is that acquiring a new vehicle is very common for people who are currently still in a Chapter 13 plan, so there is a system set up to help you. You can start by looking for lenders and car dealers who have experience in dealing with Chapter 13. Both lenders and dealers (if you need to visit both) have unique processes for getting a Chapter 13 car loan. Your interest rate will probably be higher, but the loan is possible to acquire.
If your lender or dealer doesn’t offer financing specifically designed for people in Chapter 13, find a new one – they clearly don’t have your best interests in mind. Accepting a loan that isn’t made for your situation can do lasting damage to your Chapter 13 plan and may have serious legal consequences for you.
Obtain the Right Paperwork
Once you have found a qualified dealer and/or lender, obtain the necessary paperwork from them for a loan while in Chapter 13. Fill out the paperwork as much as you are able. If possible, try to get more than one copy so you are able to keep one to review and give the other to your trustee. This paperwork should identify the type of loan, loan terms, loan amount, and the model of the vehicle you wish to purchase.
Visit Your Trustee
With the paperwork in hand, visit your trustee and ask them to continue the process. The court will need to review your request for a loan and a vehicle. This is a very good reason to make your request a reasonable one. If you just want to upgrade a car, or want a model that is clearly more than what you need, then the court is likely to refuse your request. The expense involved and your current level of debt are also important factors. Your trustee will be able to advise you on this as necessary.
Ask for a Time Frame
If you can, get a time frame for when you will be able to purchase a car. You may not be able to influence the speed of the court’s decision, but your trust should be able to give you some idea of what to expect. This will help you plan for your future accordingly. Note that you may have to make a court appearance yourself to explain your reasons for a car.
As always, if you have any additional questions, please contact Clark & Washington for more information.