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Pittsburgh, PA 15220
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6 Steps on Getting a Car Loan While in a Chapter 13 Bankruptcy Case

 

 

Man ScreamingOkay, 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". . . .

Comments

Hi, Im in a chapter 13 and I do have a letter from the trustee. I reside in Detroit, MI. They have a big limitation and the car dealership people want $1500 down, but the trustee only approve $700 down and not to exceed over $8,891 also not to exceed monthly payment over $288. Where can I get this done here in Detroit.
Posted @ Thursday, April 19, 2012 1:23 PM by Sonya Walker
I've filed Chap 13 but haven't had creditors meeting yet. My car is in the BK. I just wrecked it, they say it's totalled. Now it isn't a secured debt. What happens with amount I owe through BK on the car. Does percentage I pay go down to limit of other unsecured debts? Also, this car had been repo'd before I filed Chap 13. Will I be able to finance another car?
Posted @ Monday, May 14, 2012 1:15 AM by chris
Hi there! We are 4 months away from the LAST payment! WHOHO! We just bought a home with approval from the courts close to 5 months ago and now are in need of cars as our cars are now 7 & 8 years old. Course the rates are high because w are still considered a RISK. Since we both need cars and the payments will be $1000 together, how likely will the courts approve? Its driving us crazy how close we are to the end but cant wait!
Posted @ Monday, April 29, 2013 6:04 PM by Erin Sellers
Erin, Congratulations on being so close to finishing. I'm not sure what part of the country you're from. If you were in Western Pennsylvania, then the Court would need to approve both car loans, but since you're in the final months of your case, the payments would not have to be added or included into your Chapter 13 plan. I don't know the condition of your two cars, but much to the chagrin of my 13 year old son, my two cars are much older than yours, and they're still going strong.  
 
I have never asked the Court to approve two car loans at once, so I would think you'd have a better shot at one car loan request. See if you can conclude your case first and then you'll likely get better car loan rates once you're out of bankruptcy. Good luck!
Posted @ Wednesday, May 01, 2013 9:59 AM by Shawn Wright
Shawn, 
 
I was born in Pgh - miss it! Living in Az. Do you have any Buds here that handle BK 13. Work truck died before Xmas - can't get much advise other than get permission from court.
Posted @ Monday, January 06, 2014 9:02 AM by George
I'm on my 3 rd year of chapter 13. 2 more to go. I'm wondering if it's hard and long process to get a car loan with a chapter 13. I have a good down payment $3500 and I live in wash state. Thank you
Posted @ Wednesday, April 23, 2014 10:41 PM by Frank
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