Things Debtors Filing for Bankruptcy Should Consider Before Buying a Vehicle
Many debtors considering bankruptcy are concerned about their ability to get to work and that means their ability to purchase a dependable vehicle if necessary.
Below are a few things debtors filing for bankruptcy should consider BEFORE they invest in a new vehicle:
- Do you own your vehicle outright or do you have a loan? If you own your vehicle without a loan you may want to think twice about accruing more debt before bankruptcy just to have a newer vehicle. If you current vehicle is on its last leg, consider paying for a used vehicle that is in good working order before you file bankruptcy or if you discover that you really do need to take out a loan discuss it with a bankruptcy attorney first.
- If you have a car with a loan attached to it; but the vehicle is not in good working order, you may want to consider surrendering the vehicle in bankruptcy and buying a new vehicle after you exit bankruptcy if you are filing a Chapter 7 bankruptcy . Interest rates will be higher for someone who has filed bankruptcy but not too much higher than someone who hasn’t filed bankruptcy but who has bad credit due to missed payments and defaults. If you’re filing a Chapter 13 bankruptcy and wait until after you file to purchase a car, you will need to get the permission of the bankruptcy trustee to acquire new debt. And while it is feasible that the bankruptcy trustee will grant you permission to get a car loan, you will still need to maintain your bankruptcy plan payments in addition to payments on the new loan.
- Can you afford to pay cash for a used vehicle? Ideally a debtor exiting Chapter 7 bankruptcy or going through a Chapter 13 bankruptcy repayment plan will not accrue any new debt. If you can afford to pay cash for a dependable vehicle after your bankruptcy exit in the case of a Chapter 7 bankruptcy or during your repayment plan in the case of a Chapter 13 bankruptcy, this would leave you in a better financial position.
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