Can I Get a Car Loan During Bankruptcy?

March 23rd, 2012 by Reed Allmand

Can I Get a Car Loan During Bankruptcy?

It’s common for individuals to seek a car loan after bankruptcy but what happens if you need one before your case is completed?  You may be able to get a car loan while in bankruptcy depending on which chapter you file.  The chapter filed may have an effect on how you proceed in obtaining your car loan.

Chapter 7 bankruptcy allows qualifying debt to be eliminated or discharged.  This chapter also allows liquidation of assets with proceeds being distributed to creditors.  Chapter 13 reorganizes debt into a repayment plan that lasts from 3 to 5 years. Chapters 7 and 13 have different timetables when it comes to completing the process; something the loan lender may need to take into consideration.

The Chapter 7 process includes completing the means test to review income and assets.  After you pass the test a meeting is scheduled with your creditors.  This step is important since some lenders may not consider you for a loan unless this meeting has taken place.  While lenders often wait until you receive a discharge, if the meeting of the creditors has been completed your application could be reviewed.

If you file Chapter 13, you may need permission from your trustee before applying for the loan.  Your Chapter 13 plan is created to help you with existing debt obligations, so you will need permission before incurring another debt.  If permission is granted, the trustee may set a certain amount to borrow or cap the interest rate. Questions and concerns should be reviewed with your bankruptcy attorney and loan lender.

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About Reed Allmand

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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."

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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.  

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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.

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