Buying a New Car in Chapter 13 Reorganization Bankruptcy
Our first blog of 2018 answers a listener question: “How can I buy a new car if I’m currently in a Chapter 13 bankruptcy?”
The answer is that your purchase must be approved by the Chapter 13 Trustee and the Court, and it depends on a few factors.
- Do you currently make a car payment as part of your Chapter 13 budget?
- Why do you need a new car?
- What happened to the old car?
- What is the difference in payments between the old car and the new car?
- Are you making payments or buying the car outright?
- Is the bankruptcy plan confirmed yet?
Remember that a Chapter 13 is a reorganization, or payment plan. Your monthly payment is designed to pay back your creditors some percentage of what is owed. If your new car payment increases your budget making your chapter 13 payments unaffordable, then the Trustee will object to the new car and the Judge will likely deny your request.
However, as an example, if you get a car that is around the same payment amount, because the former car as mechanical issues, and you need that car to drive to/from work, chances are high that the Trustee will approve your request and support your motion to finance a new car with the Judge.
Obviously, we cannot anticipate every factual issue, and your answers to the questions above can change our analysis and ultimately the Trustee’s and Court’s decision. In addition, at Yesner Law, we have relationships with companies that can finance a car for you, even if you’re in bankruptcy (Chapter 7 or 13).
For more information, please subscribe to the Crushing Debt Podcast, on iTunes, Stitcher, and GooglePlay. If you prefer, please contact us to schedule a free initial consultation to discuss your options at 727-261-0224 or email me directly at firstname.lastname@example.org.
Shawn M. Yesner, Esq., is the host of the Crushing Debt Podcast and founder of Yesner Law, P.L., a Tampa-based boutique real estate and consumer law firm that helps clients eliminate the financial bullies in their lives. We assist clients with asset protection, the sale and purchase of real property, Chapter 7 liquidation, Chapter 13 reorganization, bankruptcy, foreclosure defense, debt settlement, landlord/tenant issues, short sales, and loan modifications in Tampa, Westchase, Odessa, Oldsmar, Palm Harbor, Clearwater, Pinellas Park, Largo, St. Petersburg, and throughout the greater Tampa Bay area.