It almost feels like big purchases are out of reach after you file bankruptcy. Your finances have been subject to intense scrutiny. Although bankruptcy may make it harder to buy items like a car or home, it is not impossible.
Can an open Chapter 13 case be used to get an auto loan?
A car loan is available to those who have an active Chapter 13 case and are looking to buy a new vehicle.
After Chapter 13, there are two ways to purchase a vehicle:
- Do not wait for bankruptcy discharge. This will not occur until the end your repayment plan
- Before you are discharged, ask your trustee for permission to get a car loan.
While the first option might take longer, the second can be much more complicated. If you have just filed for bankruptcy, many lenders will not approve you for a car loan.
Tips for obtaining a car loan while you are a Chapter 13 bankruptcy
- Plan and budget. Plan and budget. Keep your vehicle affordable and reasonable.
- Check out the options available at your bank. It’s time for you to research if they are unwilling to lend. An attorney can help you make the process easier and may even recommend a lender. It is important to research all options before you sign any papers. You don’t want more financial problems.
- Do not forget to check for guaranteed loans regardless of credit scores, wire transfer requests or fees when you sign up. For further verification, you can check with the Better Business Bureau.
- Get approved by the court. Once you have obtained approval from a car loan lender it is time to apply for bankruptcy court approval. They will evaluate your bankruptcy income and the amount of the loan that you are applying for. You will need to file a motion with the court detailing your loan and the car that you want to buy.
You Can Get a Car Loan after a Bankruptcy
Sometimes it is a good idea to wait until your bankruptcy is over before purchasing a car. You can wait to rebuild your credit and save money for a downpayment, which could qualify you for better terms on an auto loan.
Summarized from an article by Kostopoulos Bankruptcy Law.
