Getting an auto loan while in Chapter 13 Bankruptcy
Individuals in Florida who are considering filing for Chapter 13 bankruptcy and need new vehicles may be interested to know that getting approved for an auto loan is possible while in a Chapter 13. However, it requires the approval of a bankruptcy court and involves a number of steps.
The first step that someone shopping for a new car should take is to locate a lender that provides financing despite an individual’s credit background. Subprime lenders with whom special finance car dealerships partner tend to work with consumers with credit issues or who may be going through bankruptcies.
In order to have the bankruptcy court consider the auto loan, a sample financing contract or statement from the dealership will have to be obtained. It should include the price of the vehicle, interest rates, loan terms, monthly payment amounts and more. It is important that the dealership provides a quote with the highest possible interest rate the applicant could receive and note next to the type of vehicle ‘or similar.” Bankruptcy court approval may take some time, so having a quote that takes into account possible vehicle or interest rate changes can prevent someone from having to start the process over from the beginning.
After the sample financing contract has been provided to the bankruptcy trustee, he or she will examine the impact the loan will have on the bankruptcy repayment plan and verify that the car is a necessity. The trustee will then file a petition enabling the applicant to take on additional debt. If the court approves, the applicant can complete the loan process.
Someone who is considering filing a Chapter 13 bankruptcy should first consult with a bankruptcy lawyer to determine whether his or her debts qualify and learn about what type of financial behavior is permitted. A lawyer may advise someone whether he or she qualifies for this type of bankruptcy and may assist in creating a manageable payment plan.