Does Filing Bankruptcy Affect My Ability To Buy A Car?
Yes, but in most cases, the effect isn’t nearly as drastic as some people believe it is, especially if the debtor filed a Chapter 13 bankruptcy. That’s good news for these debtors who drive used cars. Cars typically last about eight years. If a vehicle is more than three years old, and your Chapter 13 repayment plan lasts five years, you’ll probably need to replace that vehicle before the judge closes the bankruptcy.
Briefly, Chapter 13 gives debtors up to five years to catch up on past-due mortgage payments and other secured debt obligations. Chapter 7 erases medical bills and most other unsecured debts within about nine months. Both kinds of bankruptcy protect most assets and stop most creditor adverse actions.
People who file do-it-yourself bankruptcies or work with cut-rate bankruptcy petition preparers are largely on their own in these situations. But a Chicago bankruptcy attorney starts by laying all the proper groundwork. Once this foundation is in place, creditor objections to the purchase, which are almost inevitable, usually fall on deaf ears. In fact, in many situations, the judge approves the purchase without holding a hearing.
Need for a Vehicle
Some people buy new or newer cars or trucks to upgrade their lifestyles. Upgrade purchases usually must wait until the debtor emerges from bankruptcy. Waiting is especially a good option in a Chapter 7, since these cases end so quickly. Judges rarely approve upgrade purposes, especially in Chicagoland. Once the bankruptcy ends, judicial oversight ends as well.
A lateral move, such as replacing a minivan with a minivan, is different. Judges understand that families, particularly families with more than two children, simply cannot function without private cars. If the purchase is reasonable in most respects, as outlined below, judges normally approve it.
A few people downgrade. Perhaps they replace an old minivan with an even older minivan. Judges are even more willing to approve these purchases. These debtors tacitly admit that they need to change their lifestyles. That’s not a requirement in bankruptcy, but judges still like to see it.
Downgrades aren’t always a good idea. The downgraded vehicle might not be sufficient for the family’s needs or the maintenance might be too high. In these cases, the debtor might have to ask for permission to buy yet another vehicle, and go through the whole process again.
Finding the Right Vehicle
As a matter of policy, many vehicle dealerships don’t work with damaged credit individuals. So, a family could spend several hours selecting a vehicle, and when the dealer runs their credit, the deal immediately falls apart.
A Chicago bankruptcy lawyer connects debtors with dealers who work with damaged credit individuals. Normally, these purchasers have a limited selection and pay higher interest rates. However, the fact that they filed bankruptcy is not a deal-breaker, even though they’re still under court supervision.
Most dealers generate dummy sales contracts which include information like the purchase price, down payment, interest rate, and monthly payment. The debtor must show that s/he can make all payments without compromising his/her ability to make Chapter 13 debt consolidation payments. The debtor must also show that the purchase terms are similar to other purchases made by people in similar situations.
Overcoming Creditor Objections
Creditors almost always object to large in-bankruptcy purchases, like houses and cars. They basically argue that if the debtor can afford to make a large purchase, the debtor can afford to repay more money.
The motion must include information about where the funds are coming from, such as a second job. If an attorney laid the proper foundation, these objections usually fail.
Count on a Thorough Cook County Lawyer
No matter what kind of financial problem you are having, bankruptcy could be a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle matters in Will County and nearby jurisdictions.