One of the appeals of a Chapter 13 bankruptcy filing is that you may get to keep most of your assets, including your car, so long as you provide for the loan payments in your repayment plan. Even so, you may make the hard decision to surrender it if it is an expensive, luxury model, as you may believe it is an unreasonable and unnecessary living expense given your current financial state. However, you may want to replace it with a basic, standard model, as access to this transportation may be vital for you and your dependents. With that said, please read on to discover whether you should purchase a car during your repayment plan and how a seasoned Louisville, Kentucky Chapter 13 bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you take the proper precautions before this major initiative.
Is it wise to purchase a car during my Chapter 13 repayment plan?
The whole point of your Chapter 13 repayment plan is to pay off your outstanding loan debts within a manageable three- to five-year timeline. So, if you wish to tack on an auto loan at this time, it is required that you first get approval from your appointed bankruptcy trustee and the Kentucky bankruptcy court. When filing this motion for approval, you should prepare a detailed budget and down payment strategy to prove you can still manage to meet your monthly payment expectations.
In addition, you should come forward with proof of necessity. For example, you may demonstrate that you need this means of transportation to attend to your employment, to take your minor children to and from their schooling and medical appointments, etc. Or, you may even have extenuating circumstances in which the court may feel driven to approve an emergency car purchase. This is if, for instance, your current family car has been totaled or inspected as unsafe to operate.
What actions should I take before accepting an auto loan?
Whether you want to purchase a new car during or after your Chapter 13 bankruptcy, it may be wise to get pre-approval for an auto loan. This is a conditional loan offer from a lender that gives an estimate of how much you can borrow, the associated interest rates, and the other relevant loan terms. Overall, this may give you a clearer picture of your budget before heading into car shopping and prepare you for the monthly interest to expect from that point forward.
Importantly, traditional lenders may not be willing to offer you an auto loan during or after your bankruptcy case. So, you may have to seek approval from subprime auto lenders, credit unions, and car dealerships that specialize in bad credit. Regardless, when receiving these auto loan contracts, be sure to pass them to your hired lawyer. They may analyze the conditions on your behalf and ensure you are not falling victim to ridiculous interest rates, hidden fees, and other illegal activities.
You should not let the pressure of handling your finances correctly post-bankruptcy rest solely on your shoulders. Please allow a competent Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center to assist you with your financial strategy. We look forward to helping you build a budget and such. Give us a call today.
