Can You Buy a Car or Truck While Going Through Bankruptcy?
Let’s say that you’ve filed for personal bankruptcy to get out from under crippling debt and your car is acting up. Can you buy another car or truck while going through the bankruptcy process? The short answer is “Yes, you can.” We’ll talk about it in this issue.
Getting an Auto Loan During Chapter 7 Personal Bankruptcy
Remember, in Chapter 7 bankruptcy, most secure assets are liquidated to pay off as much of your debt as possible – with the goal of keeping your creditors at bay. If you’re still paying on your current car or truck, it may be in your best interest to ask that it be excluded from the items to be liquidated. The first hurdle to clear if you’ve filed for Chapter 7 personal bankruptcy is the 341 Hearing. It’s actually a “Meeting of Creditors” but is called a 341 Hearing because that’s the part of the bankruptcy law requiring it. This meeting is usually held within 40 days of your filing for bankruptcy. Essentially, the goal of the meeting is to make sure that you were 100% honest about your finances (income, assets, debts, etc.) when you initially filed for bankruptcy protection. While lenders by and large are a bit reluctant to make loans to folks with bad credit, you should be able to find one because there are lenders who specialize in such loans. You may have to pay a bit more because of a high interest rate, tough.
Getting an Auto Loan During Chapter 13 Personal Bankruptcy
In Chapter 13 bankruptcy, someone else (a trustee) is basically managing your finances for you as you make payments in a restructured plan to pay off your debt. The trustee is the one who put your payment schedule together, so in order to take on new debt with an auto loan, you’ll need to petition or ask the trustee for permission.
A Few Things to Keep in Mind
- If it’s possible, waiting about two (2) years while in the bankruptcy process may improve your chances of being approved by your creditors/trustee because you’ll (hopefully) be in a position to show the trustee that you’re making better purchasing decisions.
- If you’ve been approved by your creditors/trustee, be reasonable with the car or truck you select. Opting for a more expensive model will most likely raise the suspicion of your creditors/trustee, who may insist on nixing the deal so that you can use the extra money that you’ll no doubt need for a down payment to pay off remaining debt.
The Oswalt Law Group in Arizona Can Help in Your Bankruptcy Decision
Having to face the burdens of seemingly crushing debt is a heavy burden to shoulder. The load can be lightened significantly by talking with a lawyer who knows the ins and outs of bankruptcy law. We welcome your call to The Oswalt Law Group for a free consultation about how the best way forward to improving your financial situation. The first consultation is always free, so call us at (602) 225-2222.