We have about 6 months left in our 3 year chapter 13. We decided to include our car into the 13. When we are done in December, our lawyer said we were done with the bankruptcy but the full amount that we are paying will all go straight ( excellerated ) to the car payment until it is paid off. Does that mean we are officially done with the BK this December or when the car is paid off ( probably 1.5 years more of paying ). What if the car breaks down, can we finance a newer one? does the trustee get involved? All these questions are based after December. Thanks
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This sounds odd. My understanding is that cars paid through Chapter 13 must be paid off within the duration of the plan, or they must be paid outside the plan. Did you include the car after your initial confirmation? If so, it sounds to me like the plan was extended (it can be up to 60 months) in order to allow for the car payment. If not, it may have something to do with your state's laws. I would suggest reviewing your Plan and any amendments you have made with your attorney.
If you must finance a new car, you have to get permission from the Trustee to both sell the car included in the 13 and buy the new one. Be prepared for very high interest rates if you're able to finance. -
Unless you actually reaffirm an auto loan (which you can only do if both the bankruptcy court allows it and the lender agrees to it), your vehicle is automatically included in a Chapter 13 whether you pay for it within the plan payments or pay for it outside of the plan payments. My Chapter 13 was discharged in 12/2012 and I was making my car payments outside of the plan. I thought that my auto loan was "outside" of the Chapter 13 altogether, when I found out that my auto loan balance went to zero when the lender received notice of my bankruptcy discharge. I called to inform them of a big mistake, but they told me that I was the one who was mistaken. My loan balance was zero because the debt was discharged even though I was paying outside the plan. I said: so the car is mine and I do not owe anything more on it? And they said: no - you will never get the title to it if you do not finish paying for it. And if I stopped making payments, the vehicle would be repossessed.
So - unless there are uncommon exceptions, you will receive your Chapter 13 discharge when all of the terms and payments stated in your plan confirmation document are complete. The balance of your auto loan will become zero when the lender gets notified of the discharge. Then, in order to avoid repossession, you will pay off the balance of the discharged loan. ( Also - this is assuming that there was no "cram down" of the loan amount, which gives the lender no choice but to accept the total amount paid within and during the Chapter 13 plan. That is actually another matter entirely.)Comment
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