Chapter 13 bankruptcy repayment plans can last three to five years. Living under a strict budget is tough. If life throws you a curve ball and your car is totaled or disabled, will you be allowed to buy a new vehicle? The Short answer is yes, the Bankruptcy Court and Trustees are not unreasonable. A bankruptcy attorney can help you manage unexpected expenses according to guidelines of your filing.
How Can I Buy a Car Under Chapter 13 Bankruptcy?
If something happens to your car, you can replace it. Notify your lawyer to walk you through the process. An appointment to amend your bankruptcy schedules and potentially to modify your plan is normal. Be aware; this process can take a little time, but an experienced bankruptcy attorney knows how to work with the Court or the Trustee to expedite the process.
Do You Need to Request the Court’s Approval?
In most cases and in most jurisdictions, there is an informal process that allows the Chapter 13 Trustee to approve the purchase of an automobile. However, they generally have set parameters that dictate limits to the monthly payment amount. If you need a vehicle that costs more than they are willing to approve, you must file a motion with the Court explaining why you need a more expensive car. It would then be up to the Court to approve or deny the purchase.
Why Do I Need to Notify the Court?
Depending on the amount of additional debt to be incurred, you must restructure the monthly payment schedule. The money for monthly car payments may reduce the amount that is set to be distributed to unsecured creditors under your plan.
I Plan to Pay Cash, Do I Still Need to Notify the Court?
If you plan to purchase a car for cash, you do not have to notify the Court. Most attorneys suggest you inform the Court regardless. Depending on how much the car costs, notifying the Court or the Trustee can mitigate issues caused if creditors petition the Court thinking that you must have surplus cash not being offered through your repayment plan.
Is It Possible to Get Loan Financing During Bankruptcy?
Some lenders specialize in loans for people going through bankruptcy. They need the Trustee’s letter of approval or the Court’s order to work with you. Shop around for a provider and negotiate your loan’s interest rate.
Sawin & Shea – Indianapolis Bankruptcy Attorneys
Buying a car during Chapter 13 bankruptcy means taking on additional debt. Turn to the Indiana bankruptcy attorneys at Sawin & Shea for help making the right requests of the bankruptcy court and keeping your repayment plan on track. With years of experience representing good people in bad financial situations, we can answer all your questions. Do you need to file for Chapter 7 or Chapter 13 bankruptcy? Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.