Get Chapter 13 Bankruptcy Auto Loan Approval



The Chapter 13 bankruptcy process can take a long time, up to five years! It’s repayment bankruptcy, so filers pay according to their trustee’s repayment plan. But what if you need a vehicle while you are still bankrupt? There is a way to get a Chapter 13 auto loan if you follow these steps.

Chapter 13 Auto Loan Bankruptcy

Since Chapter 13 bankruptcy can take some time, there is a way to get court approval to take on new debt. Chapter 13 is repayment bankruptcy, so many borrowers rely on their vehicles to keep working so they can follow their repayment plan.

If your car breaks down and you need a new one to get to and from work so you can keep paying, bankruptcy courts are usually sympathetic. Having said that, you must prove that this new debt is necessary and that it is not a frivolous purchase.

Follow these steps to get a car loan in Chapter 13 bankruptcy:

  • Find a lender who helps bankrupt borrowers – Not all lenders are able to approve an active Chapter 13 bankrupt borrower. However, subprime lenders who are registered with special finance dealers can. Applying to a subprime lender can increase your chances of getting approved.
  • Get a buyer’s order – A buyer’s order is a document that details the purchase of the vehicle and includes the car’s selling price, your down payment amount (if applicable), and information about your projected car loan, such as the car loan rate. highest interest and the length of the loan for which you are eligible. You need a buyer’s order to give to your court-appointed bankruptcy trustee, so that he can file an over-indebtedness petition with the court. It is vital : Next to your choice of vehicle, ask the dealer to write “or similar”. Since court approval can take a while, if the car you want sells while you are waiting for approval, the warning “or the like” can save you time because you don’t have to. need to get order from other buyer and can get something else at the same time price and terms without starting over.
  • Wait for approval – Your trustee sends the buyer’s order and petition to court, so now you wait for approval. Remember that the court and other creditors involved in the bankruptcy have the right to object to the new credit if they believe the car loan will have an impact on their repayment. If one or more creditors object, you will likely need to attend a hearing to argue that the vehicle is needed and fits into your repayment plan.
  • If you are approved – If your application for additional debt is approved, the court will send an order for additional debt that you can take to the dealership to complete the financing process and take delivery of your vehicle!

ACE advice: It’s important to remember that you might not get approved for a car loan during Chapter 13 bankruptcy, depending on your financial situation and the car you’re looking to finance. The court’s decision is largely based on your current budget, income, repayment plan, and the amount of the loan you want approval for. If you are denied financing for a vehicle, you may need to choose a less expensive alternative to get approval.

Approval ratings after discharge

If you are not looking to take out another car loan during bankruptcy out of necessity, or if the court simply cannot approve your petition, it may be best to seek vehicle financing after your Chapter 13 bankruptcy is discharged.

Once bankruptcy is over, you no longer need court permission to take out new credit. Plus, you’re more likely to have less debt to pay off after bankruptcy is over, which increases your chances of getting a car loan.

After the discharge, you receive discharge documents that you can use immediately afterwards to prove to a lender that you are able to finance a vehicle.

Ready to Look for an Auto Loan in Bankruptcy?

Finding a lender who can help bankrupt borrowers is easier said than done, but we want to do it for you! Here has Auto Express Credit, we’re here to help with our nationwide network of special finance dealers.

Fill out our free auto loan application form and we’ll search for a dealership in your area that helps borrowers with unique credit situations such as bankruptcy. There are never any fees or obligations to be matched with a dealer in our network, so get started on your next car loan today!


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