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When can I buy a car during bankruptcy?

It may take a lot of time and courage for Arizona residents to come to the decision to file for bankruptcy as a way to ease their financial problems. Debtors who have a steady, but low, source of income and possessions they do not want to give up during the bankruptcy process may have filed for Chapter 13 bankruptcy rather than Chapter 7 bankruptcy. Under this option, filers make monthly payments based on their income and in conjunction with the court's supervision. The repayment plan must be successfully completed during a three-to-five year period. After this, the court may discharge any eligible debt that still remains.

During this period, the filer will continue with his or her life and may need a few necessities in order to ensure it runs smoothly. One of these amenities may be a vehicle, and in order to purchase a car, the filer may be in need of a loan to finance it. The question that may come to mind is whether someone can take a loan, and if so, if anyone will give one to someone in bankruptcy.

The reassuring answer to both these questions is yes. It is possible to incur debt with permission during a Chapter 13 bankruptcy, and it is also possible to find a willing lender. Those filers looking to buy a vehicle may find lenders more willing to give a loan to buy a new car than a used one. If the buyer is part of a credit union, he or she can approach it for a loan and it is also possible to take a loan against a 401(k) plan. In addition to this, potential buyers can also contact car dealerships and ask for their assistance.

Once a lender is lined up, the filer needs to get approval from the bankruptcy trustee of both the purchase and the loan. The trustee will may recognize that a car is necessary, and understand the need for a loan to finance the purchase.

Though it may seem like a slow process, it is possible for filers to get back on their feet financially after they have filed for bankruptcy. They should not hesitate to take steps to restart their financial lives and ease their financial burden.

Source: Fox Business News, "Finding a new car loan while in bankruptcy," Don Taylor, Sept. 8, 2014