How to Trade In a Car Under Chapter 13 Bankruptcy

Trading in your vehicle while you are in Chapter 13 bankruptcy is often believed to be impossible. The reality is that it is not a difficult process at all.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Letter from trustee
• Driver's license
• Auto insurance
• Proof of income
• Registration to trade

1. Set an appointment with the attorney handling your bankruptcy case and request a meeting with your bankruptcy trustee.

2. When meeting with your bankruptcy trustee, request a letter of permission to acquire new credit to purchase an automobile.

3. Contact the lien holder of your trade-in vehicle and request a settlement amount to release the title of your trade-in.

4. Meet with a bank or financial institution to find a financing source for your new vehicle. Make sure to bring the letter from your trustee, proof of income and your driver's license.

5. Visit the auto dealer of your choice to have your trade-in appraised and pick out your new vehicle.

Tips & Warnings

• You may have to shop around at several lending institutions to find one that makes loans to consumers in bankruptcy. Consider dealer financing if you are unable to find a bank to complete the loan.
• Auto loans for consumers in bankruptcy carry much higher interest rates than loans for those who aren't.

References

• Bankruptcy Advice