Getting approved by trustee for acquiring new car during chapter 13

[jl37]

Good evening,

I'm sure some place within the forums this has been discussed but I'm a little confused on the process to acquire a new car loan within a chpt 13. I'm currently confirmed in a 100% payback 60 month plan with plenty of wiggle room and will need to purchase a new car. I've found a local dealership willing to work with me but the approving bank wants the trustee approval first it seems. When I contacted my lawyer she mentioned that in order to request I needed all the details and preapproved financing info etc. So my question is, is this something that the trustee decides on what I'm elible for in terms of amount, months etc? I'm a little confused now as I had thought that upon request the trustee decides what I can spend and gives me a blanket approval for that amount. It seems however that I need official bank approval first?

Is this a district to district thing or do trustees generally tell you what you can spend in the approval process first?

Thanks in advance.

[LadyInTheRed]

My understanding from reading this forum is exactly what your lawyer told you. The bank has to approve the loan so the trustee can approve the exact terms before you sign the papers. I've seen this topic come up many times and I don't think I've ever seen anyone say they were able to get trustee approval without first having the loan approved by the bank.

[jl37]

Thanks for the response. I kind of figured that was the case but had thought I had seen something where the trustee assigns a limit on what can be spent per month etc on the new payment plan.

[LadyInTheRed]

Well, there probably are some differences among trustees as to what they require. So, you may have read about a trustee with different requirements than yours.

[Nicollette]

When i first contacted my attorney about incurring the new debt of financing a car, he had told me to find something between $10,000 and $12,000, and to try and keep the payments between $250 and $300. Also, the interest rate could not be over 18%. I went to a dealership that has lenders that will work with people in an active 13, and got an approval. The dealership gave me a buyer's sheet for a car that was $11,000, and monthly payments being $254. My attorney sent this paper work to the trustee on two different occasions and he denied it twice. The third time, he sent it to the BK court with a motion to modify my plan, surrender the current car that was included in my plan, and ask for permission to for me to incur the new debt of financing a newer car. The BK judge approved it, and once that approval letter was showing on Pacer, I went and picked up my car. Since this whole turn around took about 30 days, I ended up with a different car, not that one that was on the buyer's sheet because it was already sold by the time I went back.

[Nicollette]

I forgot to mention that my interest rate is 16.9%.

[jl37]

Thanks for the replies. Here is how it actually ended up going down. Found the one dealership that appears to work with a few lenders on chapter 13. Found a 2008 Toyota Prius for 15K with about 40 thousand miles on it. It's in great condition and of course with the excellent gas mileage as I drive 85 miles a day roundtrip to work. The lendor basically stated that my payment per month could not amount to more then 400. So in the end I got the car for 5 years 389 per month at 18%. The good thing is that it's a program where every 3 ontime payments the lender drops the rate up to 1 half of 1 percent up to 2 percent per year. Finally I had to put down 2K which wasn't too bad.

My next issue is that not thinking forward enough I crammed down my current vehicle in the Chapter 13. I was already confirmed back in September so it is stuck in the plan. Does anyone know of a way to surrender the vehicle to the bank knowing that they are still going to get their money through the Chp 13 plan?

I don't need the third car, it has 105K on it now and we already have 2 cars and only a 2 car garage. Is it possible to have it taken back by original lender?

Thanks in advance

[jl37]

I should add that this is all pending the approval on 12-3 by my trustee in court :-)

[Nicollette]

I was able to surrender the car that was included in my plan when I got the approval from the BK court that I could finance a newer car. As a matter of fact, that was a MUST that I had to surrender my current vehicle at that time before I could get another one!!

[jl37]

Thanks. So you had it crammed down in the plan and then surrendered it to get another?

[Nicollette]

Thanks. So you had it crammed down in the plan and then surrendered it to get another?

I wasnt able to cram it down b/c I didnt have it 910 days before filing.