January 7th, 2009 by Reed Allmand 
There are a few situations that may require a debtor to purchase a new car while they are in a Chapter 13 bankruptcy repayment plan. One of the best reasons is that the bankrupt debtor’s car was totaled in a car accident. If a bankrupt debtor is in a Chapter 13 bankruptcy and needs to purchase a new car because his/her old car is totaled, cannot be repaired and is unusable, there are a few things a bankruptcy attorney could do to help him/her through the process.
The bankruptcy attorney would first file a motion requesting that the bankrupt debtor be allowed to use any proceeds from the car accident to buy a new car. Second, the bankruptcy attorney will probably request that the debtor be allowed to "sell" his/her wrecked car to the insurance company. When it comes time to buy a new vehicle, there shouldn’t be any problem if the bankrupt debtor is paying cash and doesn’t need a car loan. But if the bankrupt debtor needs to finance a vehicle, the bankruptcy attorney would need to make sure that the debtor is in compliance with all the rules governing Chapter 13 bankruptcy. The debtor should not sign any car loan without making sure that he/she is in compliance with the rules of Chapter 13 bankruptcy.
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."
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