Financing a Car during a Chapter 13

[mclawdawg]

Hi all,

Just wanted to know how difficult it was to finance a car in Chapter 13? I don't need anything extraordinary, just a reliable safe vehicle to get to work. Looking at around spending around $5000-8000.

A.) With your Credit Score being low and in Bankruptcy is it difficult to get a vehicle?
B.) What can I expect from the Trustee?

[eap82]

I think Carmella documented this very well, maybe check out her threads to see how it went for her. Good Luck!

[mclawdawg]

eap82 I will check that thread out. I was also wondering what if someone gifted you a car but you had to make payments on the car to a friend? I have a 1988 Honda Accord with 90k miles he's selling for $2000.00. Would the trustee be upset if I somehow got a car in my name in this sort of scenario?

[justbroke]

If you did this, make sure that the friend actually file a lien with the DMV. They should also have an "installment sales contract" that you sign. Just to be sure, and straight, a gift is never repaid. I would be above board and just do the installment contract and the filing of a lien against the vehicle (and withhold the title until paid).

[Carmella]

We recently purchased a car. It was pretty straight forward since we had a car totaled in an accident so we were replacing a vehicle which helped it get through the process without any questions/delays/objections.

What I learned most is 1. get the advice of your attorney 2. find a car dealership that knows how to deal with BK 3. Stay organized

My dealership of choice was clueless so I had to leave them. I did not go to the "we give credit to anyone" dealership, but the one I chose does a lot of sales "bad credit" as well as regular credit. The financial guy looked for was a car with good resale value, recommended the down payment amount. This helped the bank give us a loan with decent (not the lowest interest, but not killer interest) interest because in the worst case scenario the car would hold value and they would recoup expenses if we failed to pay the loan or car was totaled.

Stay organized--have all your ducks in a row and have all the paperwork you need so when you submit it to your attorney they can get it to the trustee/court and it goes smoothly as possible.

justbroke has great advice if you buy from a friend and of course run it past the attorney to make sure there's no glitches.

We are going to start the process to get another car since my husband and I have been car sharing and we just paid off a broken down vehicle that we haven't used in...must be a year if not longer... Hopefully this will won't be too complicated, but it could be questioned since we just bought a car, but that was an accident. The totaled car would have lasted several years it was in great condition.

I know I have to write a budget/explain how we can afford another car payment. It will be tight financially but we only have one year left. I will check with my attorney to see how specific it needs to be since the reason is a broken down car/not usable and the car sharing is more difficult as my husband's job would like him to work a different shift. So far we worked it out since we work close together and my job has flexible hours. It isn't easy, but it's workable. The first step was actually getting a loan before submitting to the attorney. The dealership gets a loan on a car they have in stock that will be sold before you get the trustee approval! But as long as you have a loan approved and paperwork to prove it you can use that same loan on a different car in the same price range.

If you can buy from a friend it might just be easier, less red tape, even if you have to get the contract, etc.

[mclawdawg]

Thank you all for that information these are really great things to note when finding a possibility for a vehicle. justbroke Carmella.

I've run into another option rather than the cheap car & payments to a friend overtime. Another person I know has a broke down truck with 100,000 miles on it that needs engine work. The truck is in really good shape other than this and I know a mechanic that will fix the truck for free. Now I will be purchasing this vehicle for around $500 and buying the parts for another $200.00. If I fix this vehicle, and it's value turns into let's say around $5k would that raise any eyebrows with the trustee? It's very rare to come across an opportunity like this with someone in my situation.