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How do I get a car loan while in Chapter 13?
I was having trouble paying all my debt, so I filed for Chapter 13 bankruptcy a few weeks ago. To make matters worse, my car died yesterday, leaving me with no way to get to work. I have a little bit of money saved up that I can put toward a down payment. But how do I get approved for a car loan while I’m in Chapter 13?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
That’s terrible that your car gave out on you at the worst moment! While it’s a nuisance, there’s a silver lining. You can get a
car loan
while in Chapter 13. All you need to do is get court approval and find a willing lender.Before you bring your desire for a car loan to the court, start by finding a lender. Some lenders specialize in high-risk borrowers, such as those in bankruptcy court. Your attorney or the court may have a list of approved lenders, so inquiring about them may save you some time.
After you shop around for the best rate, ask the lender to draft a preapproval letter that you can deliver to the court. Once you have the letter, prepare a case or argument as to why you need the loan. In your case, the court will likely approve a work-related request for a car loan.
Then, work with your attorney to update your income and monthly expenses in order to file a court motion for the loan approval. Finally, review the agreement and sign.
Note that your loan will likely have high interest rates, steep non-payment penalties, and inflexible terms. Always stay on top of your payments to avoid any further financial issues.
If you need some extra cash to make your monthly payments, start saving on your car insurance premiums with Jerry.
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