Louisiana consumers who are considering filing for Chapter 13 bankruptcy might wonder how it will affect their ability to keep or purchase a car. A Chapter 13 bankruptcy allows a person to work out a payment plan and keep some assets.
Most of the time, a car is a type of asset that a person would be allowed to keep in this type of bankruptcy. However, a payment on a luxury vehicle might disrupt the entire payment schedule and may not be considered a necessary living expense. Another consideration is whether the debtor has fallen behind on car loan payments. The debtor will need to be able to repay this amount and then keep up with future payments.
The process of paying off debts in a Chapter 13 bankruptcy lasts either three or five years, and in this time, a person might need to purchase a new vehicle. Some lenders will not work with a person who is in bankruptcy. It might be necessary to contact a dealer who has subprime lending resources. The bankruptcy trustee and the court will then have to approve the plan. The debtor will probably have to put down a significant down payment on a car. Interest rates will probably be higher as well. However, despite the lower credit score, a lender will probably be willing the work with the debtor.
Bankruptcy may introduce some difficulties of this nature, but it can also help a person get a fresh start financially. A person can rebuild credit following a bankruptcy with a secured credit card or small loans. People who are struggling with debt might want to talk to an attorney about options for debt relief.