The Law Offices of Kenneth E. Lindauer
Call today for free initial consultation

Buying a car during a bankruptcy proceeding

Massachusetts residents and others who are in a Chapter 13 bankruptcy can usually still get financing to buy a car. However, doing so will require court approval. In many cases, subprime lenders will be the ones to make offers to those involved in a bankruptcy proceeding. It is also possible that a bank or credit union will work with an individual if he or she has a relationship with that financial institution.

After the terms of the purchase have been negotiated, a prospective buyer will take a buyer's order to the bankruptcy trustee. Requests are generally only approved if a debtor can prove that there is a need to purchase it. Therefore, it is unlikely that a trustee will allow someone involved in a Chapter 13 bankruptcy to buy a luxury vehicle. If the trustee approves, it will send a Motion to Incur Additional Debt to the court.

The judge in a given bankruptcy case as well as the creditors involved in it will have a chance to object to accruing more debt. If the request is approved, the court will provide a debtor with an Order to Incur Additional Debt. This will be given to the dealer and lender that a person has chosen to work with. From there, the auto purchase process will proceed as it would in any other transaction.

By filing for Chapter 13 bankruptcy, an individual may be allowed to reorganize mortgage, credit card and medical debt. It may also allow individuals to keep their house or car during the debt repayment period. In some cases, it may be possible to accrue new debt if it is needed to help find a job or support a child. An attorney may help debtors learn more about the process of filing for bankruptcy.

No Comments

Leave a comment
Comment Information