What are the steps to purchase and finance a car in my chapter 13 bankruptcy?

You can purchase a car at any time, if you are paying cash.  Financing, on the other hand, is much more difficult.

Today I had a current client ask me about financing a newer car in the middle of her chapter 13 case.  She surrendered an upside-down vehicle in her chapter 13, and she was tired of borrowing vehicles from friends and family.  I responded to her email and gave the following steps:  

What options would I have if I need to buy a car? I surrendered mine when I filed and but now that I am moving to XXXX I’m not sure if I will be able to function out there without one. Can you let me know if this is possible?


Yes, but it’s obnoxious.

If there is any way that you can have someone else finance it in their name, and you make the payments, do so.  Otherwise, here is how you finance a car in a chapter 13:
1.  go to a dealership and tell them how much you can spend on a car and that you are in a 13,
2.  they will show you a type of car you might be able to buy,
3.  sign a purchase contract and have them draft up the finance agreement,
4.  send it to me,
5.  I file a motion with the court, and then we wait 30 days for the court to approve it,
6.  the court awards about $500 in additional fees that you have to pay out (through your chapter 13 payments),
7.  go back to the dealership and show them the signed order, and then,
8.  you can finally drive a car off the lot similar to the one you originally looked at over a month ago.
I stand firm with the adjective above, “obnoxious.”  I also didn’t tell her that the court will
usually only allow a car under about $400 a month, it has to fit your budget, and the court
frowns on luxury (Cadillac) or sports (Mustangs) vehicles.
If you can buy something with cash, always do so.  It’s much cheaper, and your insurance is
cheaper as well.  If you’re not in that kind of situation, then try to finance something as cheap as
you can stomach that will still get you from Point A to Point B.