A chapter 13 bankruptcy can last anywhere from three to five years. During that time, there is the possibility of something happening with the family vehicle. Since a car is necessary to get to and from work, it must be replaced. As the team at the bankruptcy law firm will explain, it is possible that the court will approve financing if necessary. Here are some things that debtors need to know if a vehicle has to be replaced during a chapter 13 bankruptcy.
Cash Always Works
During a chapter 13 bankruptcy, the expectation is that the debtor will not accrue any additional debt. This expectation is set to ensure that creditors participating in the bankruptcy receive all or at least some of the funds owed to them. In order to comply with this expectation, the debtor operates the home on a cash basis. In other words, there are no attempts to open new credit card or other financial accounts without the express permission of the court.
When it comes to replacing the family vehicle, it pays to determine if there is enough cash on hand to do so. Since the court does allow debtors to accumulate a limited amount of savings plus maintain up to a specified amount in a checking account, there may be enough on hand to purchase a decent used vehicle without a loan. Should the debtor be able to manage the auto replacement using this approach, the court will not have any objections.
Getting Permission for a Car Loan
The key receiving permission to secure a car loan is demonstrating to the trustee that the debtor has the ability to manage a reasonable car payment and continue to remit payments to the bankruptcy court. The team at the bankruptcy law firm can help the client go over the finances and come up with a plan to present for the trustee’s consideration. Assuming the trustee agrees that the plan is workable, the necessary documents will be issued to the debtor and the search for a replacement vehicle can begin.
When the need to replace a vehicle occurs during a chapter 13, it pays to seek help from a lawyer. Visit Stlbankruptcyfirm.com today and learn more about what sort of debt the court is likely to approve and the type of information needed. Doing so ensures that the debtor remains in full compliance with the bankruptcy terms and conditions.
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