6 Steps on Getting a Car Loan While in a Chapter 13 Bankruptcy Case
Okay, there you have it!! I will start screaming if I hear about another car salesman telling one of my Chapter 13 clients that "all you need is a letter from the Trustee saying the car loan is approved".
News Flash to All Car Salesman of Western Pennsylvania: the Chapter 13 Trustee doesn't issue letters like that. Don't ask them. They won't do it.
Here's why: the Court Rules in the Bankruptcy Court for the Western District of Pennsylvania require that the debtor seek approval from the Judge in their case. So, it's my job to do this for my client.
Here are those steps:
1) first, go to a dealership and see what types of cars suit your needs and are affordable;
2) be honest with the car salesman and tell them that you are in a Chapter 13 bankruptcy case. They'll find out anyway when they run your credit report;
3) tell the salesman that you need to provide your attorney with the hypothetical monthly payment, interest rate and total amount to be borrowed;
4) get me that information, because I will need it in the court motion that I have to file with the Court. By the way, it will take about 2 to 5 weeks for the Court to hear that motion. If you are truly in a state of emergency (let's say that your car has just been totalled), then I can schedule the hearing as an "emergency" hearing and it might be scheduled within 2 to 3 weeks;
5) unless you are seriously delinquent with your existing plan payments or you are looking to borrow money for an unnecessarily-expensive vehicle purchase, then the Judge in your case will invariably approve your loan;
6) once the Judge signs the Order of Court which approves your loan, then you can return to the dealer to finalize the purchase. Another Local Rule in our Bankruptcy District however requires that all post-petition loans be paid through the Chapter 13 plans. So, we will have to amend your Chapter 13 plan in order for the new car lender to be paid through the Trustee's Office. Not all creditors like this arrangement, because it will require them to wait approximately 3 months before being paid. Nevertheless, that is our Local Rule and unless you obtain a waiver from your Judge, you'll have to pay the car loan through your new Chapter 13 plan.
Good luck and I never want to hear from another car salesman about a "letter from the Trustee". . . .