There is a common question among people whether it is actually possible getting a car loan while in chapter 13 bankruptcy. The answer is that chapter 13 bankruptcy allows one to repay the creditors over a specific time period determined by the court. So, obtaining auto financing while in chapter 13 by paying the debt off can be a little difficult, but it is not at all impossible.
So, before you get into this loan type, let’s start with the details of chapter 13 bankruptcy:
Getting auto financing while in chapter 13 is often referred to as debt repayment. This allows one to repay the debts over the life of repayment plan that can also lower the monthly payments. To do this, you have to file a petition with the court and therefore present a plan for demonstrating the ways through which you can pay back the creditors in three to five years on the basis of your resources and income. In case the court accepts the bankruptcy filing, then it will designate a trustee to receive the payments and the trustee will distribute the payment to the creditors while offering preference to the creditors of the secured debts.
Once your filing is approved by the court and you start paying for the trustee, your monthly budget will become restricted. Therefore you make any final decisions like applying for auto loans bankruptcy, you should consult with the trustee. Without the approval of the trustee, you will not be able to apply for any new auto loans.
Even in case the trustee allows you to apply for car loan bankruptcy chapter 7, this will be tough to find out a lender, who will be ready to approve you an auto loan. The reason behind it is that bankruptcy filing has a significant negative impact on one’s credit score as well as on the creditworthiness. So, even in case you qualify for a line of credit or new loan, it will come with a high interest rate. This is another consequence of having low credit score because of bankruptcy. To get more information on auto financing while in chapter 13, you can consider visiting www.autoloanbadcredittoday.com