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Can You Make a Vehicle Purchase in Chapter 13 Bankruptcy?

Posted By Allmand Law Firm, PLLC || 20-Dec-2013

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Chapter 13 bankruptcy is a repayment plan that restructures debt obligations to help you make affordable payments each month. The plan is designed to help you get out of debt or help you catch up on debts you may have fallen behind on. Making a purchase in Chapter 13 such as a vehicle may be something you can complete, depending on your circumstances.

A vehicle is an important necessity for many families. You need a way to get to work, school, and perform other significant duties. If your car is involved in an accident or something happens to it in which the insurance company deemed it as totaled, you will likely look to purchase a vehicle with what the insurance company gives you. There are a few considerations to think about here.

If you owned the vehicle outright when the event occurred, you may be able to make your purchase with no questions asked. This is likely if you intend to buy a vehicle with cash. If you want to lease a new vehicle you may need to get permission from the bankruptcy court. Your repayment plan could be affected depending on what you would need to pay for the new vehicle.

The court may want to know basic information to learn why you want another vehicle, such as how much will you pay per month, financing agreement, and what happened with your old vehicle. As long as you are honest, you shouldn't have a problem as long as your vehicle choice is reasonable. Payments to your plan can be modified if necessary, but it is best to review your intentions with your bankruptcy attorney before taking action.

Reference: http://blog.nolo.com/bankruptcy/2013/10/25/how-to-buy-a-new-car-while-in-chapter-13-bankruptcy/

Categories: Chapter 13 Bankruptcy
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