How to Buy a Car Under Chapter 13
- 1). Demonstrate your need for a new car to your court-appointed trustee. Buying a car under Chapter 13 requires the consent of your trustee, and additional expenses will not be approved unless they are absolutely necessary. Explain your situation to your trustee and show proof of the loss of transportation or gas receipts to prove consistent work-related travel. Provide your trustee with any and all requested documentation quickly to increase your chance of having your request approved.
- 2). Find out from your trustee how much car you can afford. The trustee will review the income information provided during your case filing along with your expenses. This information will be used to determine what sort of monthly car payment you can afford. The trustee will give you this information in writing and the amount the court approves will take into account payments that are not currently covered under your bankruptcy repayment plan.
- 3). Contact local lenders and dealerships who are willing to provide financing to credit-challenged individuals. Be prepared to pay a high interest rate and a large deposit, because many lenders will consider you to be a high-risk debtor. Make sure that after fees and interest your monthly payment does not exceed the amount approved by your trustee.
- 4). Have your trustee review the financing documentation. The trustee will go over all paperwork to make sure the monthly payments do not exceed the amount approved. The trustee will also be on the lookout for signs of predatory lenders that may disrupt the Chapter 13 bankruptcy plan with collection activities or other policies. Once the trustee has agreed to the contract, you will be able to receive your financing.
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