The short answer is YES you can!!
Since Chapter 7 is a relatively short process and is usually concluded within four months after filing, large purchases such as a vehicle or home do not come up often. However, it should be noted that the purchase of a car or house is possible whether during a Chapter 7 or Chapter 13 Bankruptcy matter.
A Chapter 13 Plan is a reorganization of debt that results in the elimination of interest for credit cards and personal loans and also provides time for the bankruptcy filer(s) to repay delinquencies due and owing on a mortgage, vehicle, or taxes. Since a Chapter 13 Bankruptcy is over three to five years, situations such as job changes, vehicle breakdowns, or accidents lead the bankruptcy filer to want or need to change their housing situation or vehicle.
Buying a Car in Chapter 13 Bankruptcy
While in Chapter 13 Bankruptcy, it is most simple to change vehicles. Vehicle changes generally stem from needing a different vehicle due to changes in family’s needs or changes in family size, unforeseen repairs, the ability to get a lower payment, or an unfortunate accident that deems a replacement vehicle necessary. The process for obtaining a replacement vehicle is simple, whether your bankruptcy case is filed in Pennsylvania or New Jersey the dealership only needs an authorization letter from the Chapter 13 Trustee approving the purchase of the new vehicle. The trustee needs to make sure that the new/replacement vehicle does not cause a financial detriment which would cause a negative impact on the Chapter 13 Plan. Generally speaking, the Chapter 13 trustee approves new payments which are within 10% of the old monthly vehicle payment. Too much of an increase in monthly payments can foreseeably strain a budget and make the ongoing Chapter 13 Plan unaffordable. If you are in an ongoing Chapter 13 Matter and are desirous of purchasing a new/replacement vehicle you may use the below corresponding Chapter 13 Trustee link or contact our law office for guidance:- For Cases that are filed in the Bankruptcy Court for the Eastern District of Pennsylvania and are assigned to Chapter 13 Trustee Kenneth West, click here.
- For Cases that are filed in the Bankruptcy Court for the Eastern District of Pennsylvania and are assigned to Chapter 13 Trustee Scott Waterman, click here.
- For Cases that are filed in the Bankruptcy Court for the District of New Jersey and are assigned to Chapter 13 Trustee Isabel Balboa, click here.
- For Cases that are filed in the Bankruptcy Court for the District of New Jersey and are assigned to Chapter 13 Trustee Albert Russo, click here.
- For Cases that are filed in the Bankruptcy Court for the District of New Jersey and are assigned to Chapter 13 Trustee Marie-Ann Greenburg, click here.