Financing a Car while in Chapter 13 Bankruptcy
So you're bankrupt. If you're searching for a car to replace the Mercedes E-class you had to sell, you might be wondering how to finance the purchase. In chapter 13 bankruptcy proceedings, you won't be acting alone. The attorney who originally filed your bankruptcy can guide you through the steps of seeking financing for a car. From there, you will have to seek the approval of the trustee appointed by the court handling your specific case. After that, you'll need to find a lender who will deal with you while in the midst of chapter 13 proceedings.
Your attorney is not only there to get you through the bankruptcy proceedings, he or she, is there to give you advice to prevent you making any mistakes that can screw up the process, leaving you at the mercy of your creditors. They only want the money you owe them, and it will not fill their hearts with joy knowing you're in the market for a new car. As it stands, lenders are resistant to financing a car while you're still in the middle chapter 13 bankruptcy proceedings, so you must stick with advice your attorney gives you. After all, that's why you hired one in the first place.
The court appointed trustee has final say over your finances. The whole point of these proceedings was to see that your creditors were compensated to some extent so they wouldn't rain lawsuits down upon you. Chapter 13 differs from chapter 7 in that you're allowed to keep many of your major assets, particularly, your home. Your debts will be paid to your creditors on a five year schedule which your court appointed trustee will manage, and disburse. In a situation like this, most lenders won't touch you with a ten-foot loan application. But, it can, and has been, done by many people going through bankruptcy.
Getting financing while in chapter 13 bankruptcy is not fast, or easy. In many cases, it can take a month for the trustee to issue an answer to your request to pursue a car loan. Sometimes that answer is 'no'. If approval is granted by your trustee, you'll need to file the necessary paperwork which can be obtained from your attorney or the trustee. Your request for car financing should be a reasonable one – think used! As you've undergone a major financial upheaval, you'll want to keep your car choices inexpensive. Do not sacrifice reliability, however, as your car will need to hold up beyond the duration of your bankruptcy proceedings, since you budget won't have a lot of room for repairs.
While you're trying to get car financing during chapter 13 bankruptcy, this car loan will not be a part of the proceedings. This is a separate financial transaction, and the responsibility for making the payments lie solely with you. Although you can't make the purchase without the permission of the trustee, all liabilities associated with the purchase rest on your shoulders, and it shouldn't be made lightly. In fact, trying to buy a car at this point, can lead to financial disaster should you fail to meet the obligations of the loan. Go into the purchase with both eyes open. Be cautious. Be economical. Be smart.
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