A Chapter 13 bankruptcy can put up quite a few obstacles, but it’s not the end of the world. An experienced Chapter 13 Las Vegas attorney can show you a few workarounds. For instance, consider the challenge of buying a car.
Applying for a new or used car loan isn’t always a luxury. Sometimes it’s a desperate need, even when your finances are at the most stretched. Let’s say that the car you currently drive has broken down on the highway more than once, repairs are getting beyond your means and your boss has threatened termination because you keep showing up late because of it. In this case, a new — or newer — vehicle is a necessity.
Unfortunately, during two particularly vulnerable times in your life, this simple transaction will seem to be virtually impossible. Let’s take a closer look.
Before Discharge
If you’re in the middle of a Chapter 13 filing, you’ve been put on a payment plan. You’ll spend three to five years paying off at least a portion of the debts you owe, under the direction of the bankruptcy court. You pay the court a predetermined amount on a monthly or bi-weekly basis and the court pays your bills until your case is discharged.
That means you must seek permission to take on another loan. After first gaining loan pre-approval, your bankruptcy attorney must file a motion with the court to incur additional debt. You’ll need to provide such information as the make and model of the car, interest rate, monthly car payment amount, and why you need the purchase.
If the court approves, the additional monthly bills might trigger the need for a recalculation of your payment plan. Here’s a snapshot of how that might work.
After Discharge
Once your Chapter 13 bankruptcy has been discharged, you can once again spend your money as you wish. Or at least while living within your means. Go ahead and go car shopping, but try to stay clear of the many sketchy lenders who will try to prey on you. Just be ready to confront the reality that you’ll pay a higher interest rate because you’ll be considered a higher-risk borrower.
Getting a Loan
Some dealers and their lenders will only offer outrageously high-interest rates and others might require hefty upfront fees. Stay away! And watch out for such red flags as lenders promising “guaranteed” loans. Put it in your mental “too good to be true” file. It usually means that the interest rate is skyrocket-high to offset the risk.
Check your prospective lender’s reputation with your Better Business Bureau. Better yet, only approach car dealerships you know and trust. At the same time, work as hard as you can to repair your finances and improve your credit score over time. With a little patience and commitment, your next car purchase will be easier and more affordable.
For assistance with all related issues contact Vohwinkel & Associates, an experienced Chapter 13 bankruptcy Las Vegas attorney. Call us at 702-838-7522.
