When Tennessee residents file for Chapter 13 bankruptcy, they are given either three or five years to complete the repayment program. During this length of time, it is common for someone to need a new vehicle. Fortunately, it is possible to finance a new car while going through bankruptcy. However, the purchase will require approval from the court.
To begin the process, individuals in Chapter 13 bankruptcy will need to find a lender who is willing to give them a loan. Those who have a pre-existing relationship with a bank or credit union should approach those institutions first. If they get turned down, subprime lenders and dealerships are also options. Subprime companies offer financing to people with poor credit histories.
Once someone has found a lender, he or she can choose a vehicle. Experts note that it is important to choose a modest vehicle. The court will not approve a vehicle purchase that appears lavish or unreasonable. Once the vehicle is chosen, the terms of the loan can be arranged and a buyer’s order can be printed. This order should then be presented to the individual’s bankruptcy trustee, who will file a Motion to Incur Additional Debt with the court. If any creditors object to the motion, a court hearing could be required. If the motion is approved, the individual can return to the dealership and complete the purchase of the vehicle. If the motion is denied, the individual could choose a different vehicle or wait until the bankruptcy is closer to completion.
Tennessee residents who are having difficulty paying their debts may find relief by filing for Chapter 13 bankruptcy. A lawyer may review someone’s financial situation and explain all legal options available.
Source: Auto Credit Express, “How to Finance a Car While in Chapter 13,” Megan Foukes, June 13, 2018
