Can you buy a car during chapter 13 bankruptcy?
- Yes, you can buy a truck or a car during Chapter 13 bankruptcy
This is true even if you want to use a loan to buy the new car or truck.
WHY SHOULD YOU BE ABLE TO BUY A CAR DURING CHAPTER 13 BANKRUPTCY?
Chapter 13 Bankruptcy typically lasts between 3 and 5 years, which is long enough for a car to become unreliable.
One of the understandable fears about filing for Chapter 13 Bankruptcy is that your car might break down, and you can’t get to work.
But because you are still in an active bankruptcy, no car loan company will be willing to work with you for a new loan.
How would you get to work and make the money necessary to pay off the Chapter 13 without a car or truck?
Luckily the Minnesota Chapter 13 Bankruptcy Trustees and many car loan companies recognize that people might need to replace their vehicles over the life of the Chapter 13 Bankruptcy, and so people can buy a new car during Chapter 13 Bankruptcy.
IS THE PROCESS STRAIGHTFORWARD?
There is a process that a prospective borrower must go through to get approval for the loan, but if you need a vehicle to get to work, then no one will stop you from getting a new one.
The loan approval process is designed to make sure that the borrower has an affordable monthly car or truck payment which doesn’t cause them to miss the Chapter 13 Bankruptcy payments and have their case dismissed.
WHAT INTEREST RATE SHOULD I EXPECT?
- As a borrower you should be prepared to pay a higher interest rate than someone who has no debt, but it usually is not so bad
Remember, that while someone is in a Chapter 13 Bankruptcy, their credit report will show that they have no debt.
Everything on the credit report is typically marked as “Included in bankruptcy,” or “Discharged in bankruptcy”.
A person with no old debt is more likely to be able to pay a new debt, so the finance company will offer a better interest rate.
The vehicle lender will want to check to make sure that you’re making your Chapter 13 Bankruptcy payments on time, but they will be willing to work with you.
HOW DO I START APPLYING FOR A CAR LOAN WHILE IN CHAPTER 13?
That is a good question for your Minnesota bankruptcy lawyer.
An experienced Minnesota bankruptcy firm with good customer service will know exactly how to get you on the right track.
Over the last 40 years, I have helped many clients replace unreliable or ageing cars so that they can:
- Get to work
- Discharge the debts they can’t afford
- Finish their Chapter 13 Bankruptcy
- Get a financial fresh start
- Sleep soundly again
Will we help you too?
Now you know that you can get a new car or truck during in Chapter 13 Bankruptcy, Contact us at 612.824.4357 now to tell us how we can help you get the new car you need.