The idea bankruptcy is commonly referred to as a last resort and its quite often avoided by many individuals that are interested in making more purchases. The idea of buying a new car may seem impossible after filing for bankruptcy but there are four residents that are able to purchase new vehicles even shortly after they have completed a chapter 13 bankruptcy claim.
Here are some strategies that you could use to buy a car while in chapter 13 bankruptcy:
Paying your lender:
If you no longer owe any money on your previous vehicle and this debt has been settled, you may be able to qualify for another car loan. As long as there is no balance due with a lender on a previous car loan that was involved in your bankruptcy case, you might be able to take on this extra debt.
Buying with cash:
You can purchase a vehicle with cash without the permission of any financier. If you can find a way to still pay your Chapter 13 bankruptcy settlements and save up a bit of cash, you will be able to purchase a vehicle that is a protected asset without financing.
Receiving court approval:
If you need financing to purchase another vehicle, you’ll need to receive court approval before you can start applying for auto loans. In order to receive this approval, you’ll likely need to outline a modest budget for a new vehicle, file a written motion on what happened your old vehicle and establish a finance plan that falls in line with your settlement plan.
Asking for a very reasonable car loan and asking for a car that will be reliable can be one of the easiest ways to seek approval. Seeking a newer model of a car that’s in the same classes your old car is usually the best strategy to choose here.
Avoiding amendments to your schedule:
It’s often difficult to receive court approval if you need to amend your bankruptcy schedule. Unless there were unusual circumstances that happened to your old vehicle that requires you to purchase a new vehicle, it’s very unlikely that you’ll receive an amendment to your schedule of repayments in order to account for new debt.
Keep in mind that purchasing a new vehicle is possible even while you are undergoing chapter 13 bankruptcy. Choose the option that works best for you in your financial situation and keep in mind that a court approval can often take up to a month or more. Working with a professional attorney to make these requests can exit the IPO process by ensuring it is carried out accurately.
This post was written by Trey Wright, a bankruptcy attorney in Tallahassee, FL. Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.