Call for a free bankruptcy consultation

Louisville |


New Albany |

Schwartz Bankruptcy Law Center

Obtaining a car loan after filing for Chapter 13 bankruptcy

Driving is a ubiquitous activity and something most Kentucky residents take for granted. However, should a person file for Chapter 13 bankruptcy, and then need to purchase a vehicle during the repayment period, they may wonder if they even qualify for financing to do so.

In order to finance a vehicle during the Chapter 13 repayment period, a person will need to first locate a lender willing to provide the person with financing. Traditional lenders usually will not provide auto loan financing to those whose credit has taken a hit.

However, subprime lenders may be willing to work with those whose credit rating is temporarily poor. Subprime lenders, in general, are indirect lenders, so they will only loan money through auto dealerships who serve as their agents.

Second, a person will need to obtain a sample-financing contract from the auto dealer. This contract will contain the information on the automobile being purchased, including how much it will cost, what interest rates will be charged, how much the person will owe each month and more. The dealership should make sure to add the phrase "or similar" by the automobile the buyer is selecting and should include the highest possible interest rate the person could incur on the loan.

Once this is done, a person will need to take that sample-financing contract to his or her bankruptcy trustee. The trustee will take into account the amount of the auto loan and determine how it will affect the person's Chapter 13 repayment plan. The person will need to prove to the court that obtaining a vehicle is necessary. The trustee could make changes to the person's Chapter 13 repayment plan, if necessary, and will then decide if the proposed transaction should go through.

If it is approved, the trustee will then submit to the court a petition to take on additional debt. A person's creditors will be given the opportunity to object to the petition. Finally, the court will decide whether to approve the petition.

As you can see, while it is not impossible to obtain a car loan during the Chapter 13 repayment period, it is not a straightforward process. Therefore, those who find they need to purchase a vehicle after filing for bankruptcy should make sure they understand the legalities that must be met to achieve their goal.

Source: Auto Credit Express, "Steps to Buying a Car During Chapter 13 Bankruptcy," accessed Feb. 25, 2017

No Comments

Leave a comment
Comment Information
Make A Payment Email Us For a Response

Need A Solution To Your Debt Problems?

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Make A Payment
Schwartz Bankruptcy Law Center

Office Locations:

Louisville Office
3339 Taylorsville Road
Louisville, KY 40205

Phone: 502-785-8549
Phone: 502-485-9200
Fax: 502-485-9220
Louisville Law Office Map

New Albany Office
501 State Street
New Albany, Indiana 47150

Phone: 502-785-8549
Phone: 812-945-9200
Fax: 502-485-9220
Map & Directions