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Has anyone been approved to incur debt such as a car

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  • Has anyone been approved to incur debt such as a car

    Hello, has anyone been approved to purchase a car loan through the trustee? I am wondering how the process goes. My attorney stated that the loan from the dealership had to be included in the BK and that the trustee would make the payments. The problem is, because my situation my interest is through the roof and the only way loan payments could be brought down to affordable is stretch it out 51 months. My attorney says, the length does not matter. I have 22 months left and that any loan incurred now must be paid off in that 22 months. Is that appropriate? The reason I am even looking is my car was totaled and I need to replace ASAP. The car was old and I did not receive much from the insurance company. Any advice from anyone that has been in this predicament?

  • #2
    Originally posted by bminet View Post
    Hello, has anyone been approved to purchase a car loan through the trustee? I am wondering how the process goes. My attorney stated that the loan from the dealership had to be included in the BK and that the trustee would make the payments. The problem is, because my situation my interest is through the roof and the only way loan payments could be brought down to affordable is stretch it out 51 months. My attorney says, the length does not matter. I have 22 months left and that any loan incurred now must be paid off in that 22 months. Is that appropriate? The reason I am even looking is my car was totaled and I need to replace ASAP. The car was old and I did not receive much from the insurance company. Any advice from anyone that has been in this predicament?
    I really can't answer but I just wanted to comfort you and let you know that people do it all the time in bk 13, someone will come along with good ideas soon! This is a great place to learn the ropes! Good luck! Btw I a m kicking myself for not getting a newer car before bk! ;-)
    Discharge date: October 2017 (will it ever get here?)

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    • #3
      Originally posted by bminet View Post
      Hello, has anyone been approved to purchase a car loan through the trustee? I am wondering how the process goes. My attorney stated that the loan from the dealership had to be included in the BK and that the trustee would make the payments. The problem is, because my situation my interest is through the roof and the only way loan payments could be brought down to affordable is stretch it out 51 months. My attorney says, the length does not matter. I have 22 months left and that any loan incurred now must be paid off in that 22 months. Is that appropriate? The reason I am even looking is my car was totaled and I need to replace ASAP. The car was old and I did not receive much from the insurance company. Any advice from anyone that has been in this predicament?
      First you need to find a car and get a price. Then contact your attorney and have him/her file a motion to incur debt, stating why you need the new car and the specifics about cost. Once filed the trustee will probably approve it because it is a mode of transportation to and from a job. After approval try to find a loan that isn't outrageous and buy the car. I went to credit unions but they didn't lend to an active chapter 13. I went to Carmax and they wanted 17% interest on a 60 mo loan. I finally asked my family friend for a loan and luckily he was amenable to it.
      Filed 12/24/2009 Confirmed 9/11/12 Discharge Date 12/24/2014

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      • #4
        Thanks. I was told by my attorney to go in reverse. I found a vehicle and they even approved financing...wait for it....24.99%. Yep and this was even through a normal dealership. But my concern, was with what I was told by my attorney. I was told that my loan had to be paid off during my active bankruptcy. So if the dealer gave me a loan for 3 years and my BK only had 22 months remaining, I had to condense the total loan costs into my plan that I could not pay the loan outside of BK, like normal. Well that pretty much sucks for about anything. I could try and re-budget for a 3 year loan, but not a condensed version and paying it off in 2 years. They dealer told me they cannot hold a vehicle without final approval, which I understand, but the approval process takes 30-45 days. I would say the vehicle I was approved for would not be there that long. I now am just considering getting them to approve my piddly insurance check and giving that to me to try and find a vehicle from a private seller to get by for the next 22 months. Even going that route supposedly takes 2 weeks. I know BK cant rush these things, but the insurance will not let me keep a rental car for much longer.

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        • #5
          Originally posted by bminet View Post
          Thanks. I was told by my attorney to go in reverse. I found a vehicle and they even approved financing...wait for it....24.99%. Yep and this was even through a normal dealership. But my concern, was with what I was told by my attorney. I was told that my loan had to be paid off during my active bankruptcy. So if the dealer gave me a loan for 3 years and my BK only had 22 months remaining, I had to condense the total loan costs into my plan that I could not pay the loan outside of BK, like normal. Well that pretty much sucks for about anything. I could try and re-budget for a 3 year loan, but not a condensed version and paying it off in 2 years. They dealer told me they cannot hold a vehicle without final approval, which I understand, but the approval process takes 30-45 days. I would say the vehicle I was approved for would not be there that long. I now am just considering getting them to approve my piddly insurance check and giving that to me to try and find a vehicle from a private seller to get by for the next 22 months. Even going that route supposedly takes 2 weeks. I know BK cant rush these things, but the insurance will not let me keep a rental car for much longer.
          You could always find a buy-here pay-here dealer. They are used to working with people that have less than stellar credit. I don't know why your loan has to be paid off by the end of your BK.
          Filed 12/24/2009 Confirmed 9/11/12 Discharge Date 12/24/2014

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          • #6
            Originally posted by bminet View Post
            Thanks. I was told by my attorney to go in reverse..
            Procedures vary by court or trustee.

            Originally posted by bminet View Post
            But my concern, was with what I was told by my attorney. I was told that my loan had to be paid off during my active bankruptcy. So if the dealer gave me a loan for 3 years and my BK only had 22 months remaining, I had to condense the total loan costs into my plan that I could not pay the loan outside of BK, like normal. ..
            I've never heard of that before. Yes, pre-petition secured loans are usually paid off during the plan, but even that is not strictly required by the bankruptcy code if the creditor does not object to a plan that leaves secured debt to be paid off after the end of the plan. As for post-petition debt, Chap 13 debtors do get car loans during their plan that do not get included in their plan payment and do not have to be paid off before the end of their plans. Perhaps your local rules don't allow that. You may want to ask your attorney more questions. How experienced is your attorney with Chap 13?

            Originally posted by bminet View Post
            I now am just considering getting them to approve my piddly insurance check and giving that to me to try and find a vehicle from a private seller to get by for the next 22 months. Even going that route supposedly takes 2 weeks. I know BK cant rush these things, but the insurance will not let me keep a rental car for much longer.
            Getting a less expensive car that will get you through the end of your plan really is the wiser choice.
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

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            • #7
              Also, if you can't find a comparable car for what the insurance company is paying, go back to the insurance company and negotiate for a larger settlement.
              LadyInTheRed is in the black!
              Filed Chap 13 April 2010. Discharged May 2015.
              $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

              Comment


              • #8
                Thanks for the replies. I have not had any interaction with my attorney for the last 2 years. Back then he was, what I would call awesome, and actually the most experienced BK attorney around my area...but now, it seems my case is handled by someone else in the office and asking for him is like asking to speak to the Pope. The person I deal with now acts like my questions are insignificant. I know many people on here post a similarity about their attorney. I still would not be calling them if my car had not been rear ended and totaled. The other persons insurance company has been so nice to me that I am even considering switching my insurance to them...I am just going to wait out the process to try and obtain just the insurance check, which by the way is barely going to buy me a car that may or may not last 2 years, but the time frame is just difficult to wait. Thanks again.

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                • #9
                  Is the person you are dealing with an attorney? If not, insist you speak with the attorney. Even if it is an attorney, insist you speak with the first attorney. If they won't cooperate, send the first attorney and email or write him a letter saying you aren't happy with the way you are being treated and that you would like 5 or 10 minutes of his time to discuss the process for incurring new debt to purchase a car.
                  LadyInTheRed is in the black!
                  Filed Chap 13 April 2010. Discharged May 2015.
                  $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                  Comment


                  • #10
                    I recommend looking at a good, reputable, independent used car dealer. Especially in small towns. In our case, all three major name brand dealerships are owned by the same family. They have a monopoly, and certainly don't mind jerking people around. There is an independent used vehicle dealer in town, that is reputable. I am seeing more vehicles around the community, with his name brands on them.
                    "To go bravely forward is to invite a miracle."

                    "Worry is the darkroom where negatives are formed."

                    Comment


                    • #11
                      I am considering getting a replacement car for my very high mileage, but paid off car. The one thing I want to confirm is this: does the new loan car payment reduce the Ch 13 plan payment or if included in the payment, does it reduce the amount of $ going to unsecureds?

                      Comment


                      • #12
                        Originally posted by switch625 View Post
                        I am considering getting a replacement car for my very high mileage, but paid off car. The one thing I want to confirm is this: does the new loan car payment reduce the Ch 13 plan payment or if included in the payment, does it reduce the amount of $ going to unsecureds?
                        It really depends on your plan and what the court will approve. I am pretty sure a new car loan would be paid by you directly, not through the plan. If you need to lower your plan payment in order to make the car payment, you will need to petition to modify your plan. If your car is still running, I doubt the court will approve incurring new debt at the expense of unsecured creditors. But, the best way to find out what is possible is to ask your attorney.

                        Why didn't you replace your car before filing BK?
                        LadyInTheRed is in the black!
                        Filed Chap 13 April 2010. Discharged May 2015.
                        $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                        Comment


                        • #13
                          I suppose all lawyer answers may be different, but what I was told, and it was from the paralegal, not the attorney, because for whatever reason I have been unable to speak with him since day 1, but she said my loan would be paid for inside the plan. This made no sense to me. So a lending company offers the loan and it gets immediately thrown into BK and payments made by the Trustee. Here was my offers. 1 - since I am ahead of my plan by several months, I can obtain the loan and extend my plan a little without raising my monthly payment or I could raise my monthly payment to get the loan paid off and still end early. Umm...the answer was no to all. I am not doing either. I wanted to pay outside the plan because it would actually begin to raise my credit score and having to place the loan into immediate BK just did not make sense. So...I decided to just petition to keep my insurance settlement offer and I will just find something to get by for 21 months. This was sent on August 12. Today on September 25th I still have not heard a word from the Court and the attorney's office keeps giving the runaround about having to submit the Order to the Court 3 times. Ugh...this whole process is absolutely draining. There is no reason for them to keep my settlement, no creditor was apparently in disagreement during the 21 day notice and all of my secured have been paid. I am down to unsecured 4th party buy-out collection agencies left, so letting me keep a $4000 settlement to replace a needed vehicle should not be a problem to get approved. However, it seems to be difficult to even know if the judge even received the order. I watch PACER 10 times a day.

                          Comment


                          • #14
                            Originally posted by dmc-2008 View Post
                            Btw I a m kicking myself for not getting a newer car before bk! ;-)
                            Me too!!!!!!!!!

                            Wife totaled well kept van 5 months into plan and had to buy something less desirable. I thought I could get through with mine, but have spent close to what a payment would have been every year to keep it running. I almost miss the simplicity of my old baja bug from when i was a kid.

                            Sorry bminet, I cannot share any experience. I have read many posts where folks have been able to buy while in a plan. I am sure the factors to allow it are district, trustee, and judge specific. Its like the aligning the stars.
                            11/23/'10-filed ch 13. 1/6/'11-341, confirmed. Below median. Plan completed 11/30/2015. DISSCHARGED 4/4/2016.JP

                            Comment


                            • #15
                              If the entire proceeds from the insurance were used to buy another car in full why would the trustee even have to know? Wouldn't the value of the asset (insurance proceeds) be the same? Just don't get a loan of any kind.
                              11/23/'10-filed ch 13. 1/6/'11-341, confirmed. Below median. Plan completed 11/30/2015. DISSCHARGED 4/4/2016.JP

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