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Is a vehicle purchase possible during Chapter 13 bankruptcy?

| Feb 16, 2017 | Chapter 13 |

For some Louisiana consumers, getting back on their feet after financial difficulties can take a long time. While the support and guidance of an experienced attorney can be invaluable when a person files for Chapter 13 bankruptcy, it can be just as valuable in the three to five years it takes to complete the process. Many issues can arise during that time, one of which is the need for a new vehicle.

The process of purchasing a vehicle while in a Chapter 13 bankruptcy starts with finding a dealer who is willing to work with a buyer in bankruptcy. Such dealers typically have arrangements with lenders who are prepared to provide financing to such a client. Once the lender has agreed to finance a vehicle, the dealer will prepare a sample statement for the funding for which the bankruptcy court’s approval will be required.

Because the process can take time, the identified vehicle may be sold by the time approval is granted. For this reason, the buyer must make sure the dealer includes a note saying “or similar” with the vehicle choice, and that the interest rate used for the calculations is the highest potential rate. This will avoid the transaction being denied by the court if the eventual deal involves a different vehicle at a higher interest rate. The consumer must hand this statement to the bankruptcy trustee who will present it to the court for approval.

For a consumer who is already overwhelmed by the experience of going through a Chapter 13 bankruptcy, the continued support of his or her bankruptcy attorney can be invaluable. A skilled lawyer can assist with the process of getting court approval for the purchase of a vehicle. This may include support in justifying the need for the vehicle in the Louisiana bankruptcy court.

Source:, “Buying a Car During Chapter 13 Bankruptcy“, Accessed on Feb. 10, 2017

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