First of all, what is a Chapter 13 Bankruptcy? Also called a wage earner's plan, it enables a debtor with a regular income to develop a sustainable plan to repay his debts over a period of time, without losing his property. Under this provision, homeowners could save their homes from foreclosure and their other properties from repossession, could lower their regular payments, and extend secured debts.
Here's the important question, however: is it possible to make a large purchase, such as a car, once a person has filed for Chapter 13 bankruptcy? The answer is yes, and in fact, this occurrence is fairly common. Here are some things to remember if you want to purchase a car during Chapter 13 bankruptcy:
Consult the matter with your attorney. The lawyer or trustee who will handle your bankruptcy filing and who will make deals with your creditors is also there to help make your plans for repayment and budgeting your income. He's the one you should consult with regarding your plans for buying a car.
Ask your attorney if he knows car dealers who accept and finance people who have filed for bankruptcy. Since your attorney has dealt with this situation for a long time, he must have contacts of reputable car dealers who will accommodate you.
Go for a car that will give you low monthly installments. During the 3 to 5 years of your Chapter 13 bankruptcy, you will have to arrange your income so that you can doably settle your monthly payment scheme, and what is left over is for your living expenses. Your third priority is for your car payments. Do your computations and see how much on monthly car payments you could afford. Make sure that you compute for your total monthly payments, including the interest rates.
A word about interest rates: you may expect car dealers to charge you with high interest rates because of your unfortunate credit history. Take the time to do comparison shopping among different car dealers so you could get the best deals out there.
Choose the car well. Make sure that you purchase a good car, since it's going to be hard on your budget if you'd have to pay for car repairs as well.
Check online sources. There are online sources that could help you gauge your chances for getting approved for a car loan during bankruptcy. One such site you could check out includes bankruptcyautofinancing.com. Make sure to try out their finance calculator.
Consider leasing instead of purchasing. If you've done your computations and find that the monthly payments for a car might be too heavy on your budget, you may choose instead to lease a car for the meantime. Also, you will have better chances of finding dealers who will lease cars over those who will agree to finance your purchase.
Purchasing a car during Chapter 13 bankruptcy entails a lot of assistance and guidance from your bankruptcy attorney. That's why it's very important that you have an efficient attorney that you could trust. Good luck, and hope this helped you out!