On behalf of Trenton Grand of Grand Law Firm posted in chapter 13 bankruptcy on Monday, June 18, 2018.
People in Louisiana currently making payments as part of a Chapter 13 bankruptcy sometimes need to buy a vehicle. Because a Chapter 13 payment plan lasts three or five years, the legitimate need for a car could arise during that time. Bankruptcy law includes a process for financing a vehicle. A person must first arrange for a loan and then file a Motion to Incur Additional Debt so that the court can approve or deny the request.
Getting a loan while involved in a bankruptcy plan presents a substantial challenge. A person might succeed in gaining approval from a bank or credit union. Subprime car dealerships provide the next option. These car dealers work with people who have bad credit histories. After gaining approval for a loan, a person must bring the written financing agreement to the court trustee managing the bankruptcy.
A trustee will have the person prepare more paperwork that explains the reasons for the car purchase. A debtor must select a reasonable car model because the court is likely to deny a luxury car purchase. The trustee will then send the request to the court. An approval will result in the issuance of an Order to Incur Additional Debt. The person would take this document to the lender and proceed with the purchase. A denial might be overcome if a person chooses a different vehicle or waits for more time to pass.
Legal advice often plays a role when people file for Chapter 13 bankruptcy. An attorney may be able to guide a person through the process of disclosing financial hardship to a court. Legal representation might also empower a person experiencing harassment from creditors. With an attorney's advocacy, a debtor may be able to regain control before facing consequences like wage garnishment or property liens.