Chapter 13 Auto Financing
Getting an auto loan while in a Chapter 13 Bankruptcy is a unique (and sometimes tedious) process.
If you have been in a Chapter 13 for very long, you know that the Bankruptcy Court and the Trustee basically have total control of your finances. You cannot add any debt without their knowledge, otherwise they could dismiss your Chapter 13 and you would be starting over. In Washington, and most other states, in order to get a bankruptcy auto loan while in your Chapter 13 Bankruptcy, you have to obtain a letter from the Trustee granting permission to buy a vehicle outside of your repayment plan or obtain signed Motion to Incur Debt.
The Trustee letter is a fairly new process in the state of Washington. As recently as November 2011, the only way people in a Chapter 13 could get an auto loan was with the Motion to Incur Debt, which took about a month. Since dealers turn their inventory over much faster than that, the process was painfully frustrating.
Now, in most cases, we are able to go through the Trustee to get permission.
Chapter 13 Auto Financing Process:
- You apply for a loan with a company that specializes in Chapter 13 Bankruptcy Loans (like WA Auto Credit)
- We review your bankruptcy and credit to figure what programs you will qualify for.
- We filter your probable loan criteria against the available dealers’ inventory to help you find as many vehicle options as possible based on the monthly payment and down payment you feel comfortable with.
- Once you pick out a car, we prepare all of the paperwork (including contract, licensing documents, and buyer’s order) to give your attorney so that you can request specific permission letter from the trustee.
- We will hold your car for up to 10 days, allowing you time to get the permission letter. Without the letter, you do not have a real approval or a real loan.
- We then get final approval from the lender and fund your loan once all the normal verifications have been done.