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Can you get a car loan while in Chapter 13?
I filed for Chapter 13 bankruptcy recently. Just a week or so later, my car went kaput, and now I have no way to get to work. I have enough money for a small down payment on a car loan, but that’s it. Is there a way to get a car loan while I’m in Chapter 13 bankruptcy?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Why do cars seem to always die at the most inopportune moment? It’s upsetting, but the good news is that you can still get a
car loan
in Chapter 13 bankruptcy. However, you will need approval from the court and a strong case for why you should be allowed to accrue more debt.To get a car loan in Chapter 13, start by finding a lender that specializes in high-risk financing. The court may have an approved list of lenders, so you should communicate with your attorney about finding a reliable lender.
Once you find a lender, have them write up a preapproval letter for you to take to court. Along with this letter, you will need to prepare a case for why the court should allow you to take out a loan. If you need the loan for work-related purposes—your request will likely be approved.
From there, work with your attorney to update your monthly expenses and income and file a court motion for loan approval. Your final step is to review your agreement and sign. Remember, your loan will likely have inflexible terms and high interest rates, so it’s important to stay on top of your payments.
For help making your monthly payments, start saving on car insurance with the
Jerry
app. A licensed broker, Jerry helps users save $879 per year on car insurance. Just sign up, enter your information—and Jerry will send you competitive quotes from over 50 top providers like Progressive and Nationwide in minutes.View full answer
- Gregory R.
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