You've completed the process of filing for a Chapter 13 repayment plan, and you are ready to start fresh for the New Year. You made the resolution to reorganize your debt and be more responsible with your finances from here on out. But what can you do when the time comes for the purchase of another vehicle?
A Chapter 13 plan can last either three or five years. That's a long time to be on such a regimented payment and budget plan, and there are bound to be financial or lifestyle changes for you within that time period. That reliable car that you have now could run its course, or, if you only have one car, your spouse might find themselves in a position where they need a vehicle for a new job or to meet other obligations.
So, when that time comes, what is the process?
Purchasing a Car During a Chapter 13 Bankruptcy Plan
The first thing you will need to do when you are ready to buy another vehicle is locate a car dealer that is trained in working with Chapter 13 car buyers and complete the application process. Once you have worked with the dealer to select a vehicle that falls into your qualifying price range, you will acquire a sample statement from the dealer that specifies the loan terms as well as the information on the selected automobile.
You will then present this sample contract to your Chapter 13 trustee. Since it will only allow you to purchase the specified vehicle, be sure that the dealer makes a note on the document that says "or similar" next to the vehicle choice. The reason you want to do this is because the process to incur additional debt may take 30 days or more to complete. This means that that once you have the approval from the court, the vehicle you originally looked at may be gone. And, since interest rates rise and fall, you will want to have the lender list the highest possible interest rate on the document. These two precautions will protect you from having to start over from scratch if the selected vehicle is indeed no longer available.
Going to the Chapter 13 Bankruptcy Trustee
You will take these documents with you to your trustee. The trustee will measure how much new debt you are taking on against how much it will affect the amount you are currently paying to the creditors listed on your plan. So, be sure that the vehicle you are interested in buying is reasonable and inexpensive. Do expect your request to be denied if you are considering a high-end luxury car. After this, the trustee will file your petition to incur new debt with the court. It will also be submitted to your creditors and other pertinent parties. Prepare to have a short court hearing to provide further explanation as to why you need to purchase a vehicle.
It is very possible that you will not need to attend a court hearing if none of your creditors object to the amended plan. If approved, you will then take a copy of the court's order back to the lender and complete the buying process.
Beware of Shortcuts
If the dealer you are working with suggests that they can approve you for the car loan without going to your trustee beforehand, we suggest that you don't work with them. This kind of shortcut could result in your Chapter 13 plan being dismissed, and you will once again be responsible for the full amount of your debt.
Qualified Dealers Can Help You
Auto Credit Express works with a network of dealers who have the qualified finance departments that can help you get what you need. Complete our fast and easy online application today in order to get placed with the dealer who has the ability to get you back on the road. Start today.