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Buying a Car in Chapter 13 Bankruptcy

How to properly purchase a car while in Chapter 13 bankruptcy

Though it is possible to buy a car while involved in a Chapter 13 bankruptcy, you will need to make sure that you follow the correct procedure to avoid having your case dismissed for acting contrary to the court requirements. Those who need to purchase an automobile because of their jobs or family responsibilities must obtain their car loan in accordance with the court.

The proper process

First, you will want to find a qualified dealer or lender that has experience working with special finance situations. You may not be able to obtain a loan from a bank or credit union due to your special circumstances, so working with people who are familiar with various credit situations is a must. Once you have found a knowledgeable lender and chosen your car, you will want to get a statement that outlines the details of your loan. This should include specifics such as loan length, monthly payment schedule and amount, and lender interest rate.

After obtaining the statement with the terms of the loan, you have to now present it to your court appointed trustee. Since each trustee has different procedures to be followed, you should contact your attorney who will advise you of your trustee’s requirements.  Your trustee will then decide whether the car you chose is fitting in your situation, and if that is the case, he or she will give you the necessary paperwork to take back to the dealer. In some jurisdictions you may need to file a motion with the court and in other jurisdictions, an approval letter from your trustee may be sufficient.  Choose a reasonably priced car to improve your chances of getting your new debt approved.

How long does this process take?

The entire process, from start to finish, may take up to one month, and sometimes even longer. If you are in extreme need of a vehicle and can prove that your need is legitimate, your case may be expedited.

If you are involved in Chapter 13 bankruptcy and are in need of advice or representation, Kelley & Fulton can certainly help. We invite you to schedule an appointment with an experienced bankruptcy lawyer in West Palm Beach and get started on the path to a fresh financial start today.