Buying A Car During Chapter 13 Bankruptcy

August 10th, 2010 by Reed Allmand

Buying A Car During Chapter 13 BankruptcyBecause Chapter 13 bankruptcy can last anywhere between 3 to 5 years, there are a lot of things that can happen during that time.  One of the most common events is the breakdown of an old car and the need to buy a new one.  But a debtor in Chapter 13 bankruptcy cannot purchase a vehicle or enter into any other debt contracts without prior approval from the bankruptcy trustee.  Here are some things debtors should consider:

  1. If you purchase a car during your Chapter 13 bankruptcy it will increase your repayment plan obligations.  Can you really afford that?  Take into consideration that if you are buying a new car or even a used car with a car note, you will need to make your car payment plus any additional insurance required which will be more than what is required for a fully paid for vehicle.
  2. Will you be able to find financing for a car loan and if you find financing will it be with a reasonable interest rate?  Remember, bankruptcy is about reducing your debt and helping you get on your feet financially.  The last thing you want to do is to take on a loan with an astronomical interest rate while in Chapter 13 bankruptcy. If you are considering purchasing a car during your Chapter 13 bankruptcy, consider paying cash or even taking out an interest free loan from family and friends if necessary.
  3. One benefit of purchasing a vehicle during Chapter 13 bankruptcy is that it can go a long way in helping you rebuild your credit.  As long as you make payments on time and those payments are reported to the credit bureaus, at the end of your Chapter 13 bankruptcy you will have 3 to 5 years of good credit already reported on your behalf.


About Reed Allmand


Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

View all posts by Reed Allmand


Subscribe to our e-mail newsletter to receive updates.


Why do I need to submit a new wage order when I modify my plan

When we modify your bankruptcy plan we are changing your plan payments. This means that we have to get with your employer and change the terms and amount of your wage order. The only way we can do that is by filling out a new wage order form.  

Learn More
What happens if the stay terminates on my home?

If the bankruptcy stay terminates on your home that means that even though your in bankruptcy, your creditor can pursue all there legal remedies they can pursue if you were not in bankruptcy. This includes foreclosure, and having your house sold and evicting you from your house.

Learn More

Find Location

  • Dallas Bankruptcy

    5646 Milton Street, Ste. 120 Dallas, Texas 75206
  • Fort Worth Bankruptcy

    860 Airport Freeway, Suite 401, Hurst, Texas 76054
  • More Locations

Meet Our Clients