Car Loan Question

[Morcant]

I've been in a chapter 13 happily for about three months now and it's working out fine.

I currently drive a vehicle that my work provides, but they are pulling the plug on that at the end of next month. I need to get a vehicle that fits their parameters for their new company policy. They are reimbursing us to use it for work, so I'm not pulling the payments out of my own pocket. I've spoken with my lawyer and he's aware of the situation. He says to find something and send him the info and he'll get a hearing with the bankruptcy judge and it'll get through in a couple days.

I'm aware of the fact that it would be quite difficult for me to secure a car loan with a lender through a dealership and if I were to get one, I'd be looking at basically a 15% or more interest rate.

Would it be possible to have my father-in-law buy a car from a dealer without my involvement and then have my purchase the car from him in monthly payments? He could flat out buy a car in cash if he wanted to, so that's not an issue. I just want to know if I'd run into any trouble with a judge if I were to buy a car from a relative.

[DavidT11]

Morcant. Generally, it should not be an issue structuring the purchase of your new car through your father-in-law, so long as it is done in a way that is made clear in your bankruptcy schedules and Chapter 13 plan. What you are describing is a purchase-money loan made by your father-in-law, that is, your father-in-law is financing the purchase of the car you are buying from him. Father-in-law becomes "creditor-in-law", so to speak. As far as the payments are concerned, your bankruptcy papers will be amended show that the payments wash, namley, your employeer reimburses you and you, in turn, make the loan payment to your "credior-in-law". I would file a motion with the Court (say a 502(j) motion or a 1329(a) plan modification) asking that the Court give its blessing before you move forward, namely, before your father-in-law actually buys the car. I hope this helps.

[Pandora]

I've been in a chapter 13 happily for about three months now and it's working out fine.

....They are reimbursing us to use it for work, so I'm not pulling the payments out of my own pocket.

First question: Is your plan confirmed after 3 months? If not, many things can change until you're confirmed, including your payment.

If your company is paying for it... why worry about the interest rate?

I'd not involve your FIL at any rate as its your job and responsibility - not his. Questions: who holds the title? Will FIL hold a lien in order to be a "creditor" ? wait for your lawyer to discuss / bring issue up to trustee and then go from there - that is what you hired an attorney for vs. filing pro-se. ;) FWIW, ANY payments to "creditors" will have to be reported to your attorney / trustee.....

[Morcant]

Yeah, our plan is confirmed.

Our company is reimbursing us a fixed amount, which doesn't change regardless of the vehicle and a variable amount, that changes based on how many miles we drive. That means I do have to worry about the cost of the vehicle and the interest rate involved. If my father-in-law can buy a car at less than a 5% rate, why does that make less sense than me buying one at 15%, if I can get approved? I basically need a vehicle that's less than two years old anyway.

It brings up another question though. If it's my father-in-law's vehicle and I'm using it for my work and paying for it with a reimbursement provided by my employee (separate from my actual wages), would I have to get it approved by the court?