Car Financing and Chp 13?

[kmb]

I've seen lots of posts regarding car financing after Chp 7 discharge, but I need advice on Chp 13. We are 7 months in and the lease on my car is up in Feb. 2008. I need to have a car for work. Ideally I would like to find a way to re-finance my current car to just buy it out, but don't know who will work with me being that I won't be discharged for another 52 months.

Does anyone have any advice? I've been with my current finance company for 2 vehicles/8 years and have never had a late payment, but not sure how willing they will be to work with me.

TIA

[chpxiii]

First of all, you will need permission from the courts to get a loan since you're not supposed to incur any new debt or try to obtain credit while in a chapter 13 payment plan. The courts, I believe, do see a need for a vehicle and so bankruptcy judges - depending on the car the person wants to buy - will allow a loan for a car.

I have heard, as a general rule, that you need to be in your chapter 13 payment plan for atleast a year before a judge will grant you permission to get a vehicle loan. Also, it's not just the courts, but most lenders won't even consider giving you a loan until you're atleast a year into your payment plan. There are some who would consider you - but you'll probably get the worst rates. Some chapter 13ers have been lucky, though.

If you filed with a lawyer, call them and tell them your situation and that you would like to start petitioning the courts (I'm not sure how long this will take, ask your lawyer) about getting a loan to purchase your vehicle.

[kmb]

Technically though I'm not taking on new debt, as I currently have monthly car payments on the lease. I'm hoping to be able to re-finance the same car and keep my payments around the same amount that I'm already paying.

I just need to find a company that will finance me--I know the interest rate is going to be high, but not much I can do about that right now.

[krielly]

Technically you are taking on new debt i beleive.

We had a truck payment when we filed in 2005. Long story short, we surrendered it back to the back about 1 year ago. We just bought another used truck last month. My question to the lawyer was "why do the creditors get notified and have an opportunity to object, as the new payment is actually a little bit less than the old one?". It seemed to me like we would be pretty much in the same scenario as we were when our plan was confirmed.

But, he said it was a new debt (different contract).

I will tell you it was really difficult to find a lender, and we actually gave up trying for about 6 mos, before trying again.

Also, there is probably a limit as to the amount the trustee will allow you to borrow.

[HHM]

Regardless, you MUST get trustee permission.

But yeah, you are better off to wait at least 12 months into the chapter 13 before trying to do this.

[kmb]

I know I have to get Trustee approval, I'm not too worried about that part as it's pretty obvious what will happen if I don't have a car.

My question is what am I supposed to do between February when my lease is up and June which will be my 12 month mark? If I don't have a car, I can't get to work, and if I can't get to work, I can't make my payments to the trustee and I fail at this.

My lawyer hasn't been much help, he says to "wait and see what happens when your lease is up", but I can't be scrambling around trying to find transporation if they show up at my house and take my car away.

I'm trying to be proactive and get some resolution before it's too late.

Thanks again

[lrprn]

I'm trying to be proactive and get some resolution before it's too late.

Start by asking your lawyer to speak to your trustee. Then once you have his/her permission to pursue another lease or loan, start working on it.

Have you spoken with your car lease lender yet? What kind of payment record do you have in the past with them?

[kmb]

I haven't spoken to my current lender, because I don't want them to start their process any earlier than necessary by raising a red flag. I have an excellent payment history with them though, 8 years on 2 vehicles and never have had a late payment.

My lawyer doesn't think it will be an issue with the trustee, so that's the least of my worries right now.

[chpxiii]

kmb,

Well, considering there is a time gap, again, talk with your lawyer and have him talk to your trustee to see if you can get permission earlier than the recommended 12 months. If they say it will be a go, then talk to the lender.

[maddog2112]

I purhased a new vehicle 3 mos into a chapter 13. I let my lawyer know I was sending my expired lease back and would need a new vehicle. The procedure I had to follow was to find a dealer who could find me financing, which wasn`t easy. I was turned down by ford credit even though I had a very large down payment. I went to gm and they found me financing thru drive financial in dallas. 18% interst with half price down .I couldn`t be choosy.We filled out all the paper work on a vehicle which showed how much I wanted to finance and all that was sent to the trustee for approval which took about a month. Thats in ky., a deaaler in indiana said the process only takes about a week in that state ,so I guess states are different. You can find this out thru talking to dealers on the phone.It`s quite a lengthy and nerve racking process but can be done. Your right to start on the process early. Hope this helps.

[kmb]

As an update, I was able to re-finance my lease through my current lender (VW) at 4.9% interest for the 32 months it will take to pay off the car, which is the same payment/interest rate I leased it at. Because the payment amount was already accounted for in my bankruptcy, I did not need to get additional trustee approval per my attorney, as the payment didn't change, and the trustee didn't have the payments scheduled to stop at a specific time. VW was more than happy to continue financing me as I had been a good customer for them. From my research, I found it is pretty common that if you have a good relationship many large car mfgs will continue to carry you through.