Getting a car while in a bankruptcy case in Columbus, Ohio
It is not unusual for Columbus residents who are under Chapter 13 bankruptcy protection to need a car. According to the law, those under this type of bankruptcy protection must get court approval before incurring any and all new debts during the 3-5 years that they are making bankruptcy payments. Being in bankruptcy does not mean that someone must go without a car or with one in poor condition. But it is important for such people to purchase modestly priced vehicles as opposed to luxury cars.
When purchasing a vehicle, an individual in bankruptcy must first determine if they can afford the payments. Schedules I and J reflect a person’s income and expenses, and they must demonstrate that this person has sufficient means to buy the vehicle while continuing to meet the regularly required bankruptcy payments.
Once this condition is met, a person must find a vehicle whose monthly payments are affordable. Any loans that are taken out in order to finance the vehicle are paid by the individual in bankruptcy directly as opposed to by the trustee. Any contract involved will also be made only between the car dealer and the individual and will not be included within the scope of the bankruptcy. Though the car dealer must provide the court what is called a term sheet, which shows the term of the loan and the amount of interest to be paid, along with the make, model, year and price of the vehicle.
The individual’s bankruptcy attorney then submit an application to incur debt – purchase a new or used vehicle with the trustee. The attorney must state in this application not only the loan amount for the vehicle and the monthly payments. They also must describe why purchasing a vehicle is necessary. The justification for purchasing a vehicle must be reasonable, and if the trustee does not object to this reason, the request will be granted. Usually, in a couple of days the trustee will grant the request and the vehicle can afterward be purchased.
Those under Chapter 13 bankruptcy protection should understand that under no condition should they purchase a vehicle without court approval. It could result in a bankruptcy case being dismissed.
In conclusion, just because someone is under bankruptcy protection does not mean that life does not go on. But it is important for individuals to live within their means.
Wood & Brewer knows firsthand how financial struggles can negatively impact our lives—it’s why we are so dedicated to helping our clients achieve a fresh start. Should you choose to hire our Columbus Chapter 13 bankruptcy attorneys, we will walk you through the process step-by-step, giving you clear and effective counsel about every decision you need to make. We welcome you to contact us today.