How to Pay for a Vehicle in a Chapter 13 Bankruptcy
Pursuing a Chapter 13 bankruptcy case provides you the ability to bring an end to debt collection activity by your creditors. Once you file a Chapter 13 bankruptcy case, your creditors are prevented from taking action against you pending further order of the bankruptcy court. Through this type of bankruptcy case, a repayment plan is developed, under the supervision of the bankruptcy trustee. You have between two to five years to pay off creditors pursuant to a Chapter 13 bankruptcy plan. With this in mind, you may need to know how to pay for a vehicle in a Chapter 13 bankruptcy.
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Instructions
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Claim the vehicle as exempt property in your Chapter 13 bankruptcy petition. You obtain the petition form and related documents from the clerk of the bankruptcy court. You can access these materials both in the brick-and-mortar office of the clerk as well as through the bankruptcy court's website.
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Advise both the bankruptcy trustee and the automobile loan lender that you desire to enter into a reaffirmation agreement to keep the automobile. A reaffirmation agreement is a contract between you and the lender through which you are able to keep possession of the vehicle as long as you make future loan payments in a timely manner.
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Obtain a form reaffirmation agreement from either your automobile lender or form the bankruptcy court trustee.
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Complete the reaffirmation agreement and sign the document. Deliver to the vehicle lender for signature.
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Develop a Chapter 13 bankruptcy plan under the guidance of the bankruptcy trustee. The Chapter 13 plan outlines the manner in which you will repay your creditors. Through the plan you make one monthly payment to the bankruptcy trustee. The bankruptcy trustee distributes the combined payment you made in each individual creditor.
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Attend the creditors' meeting scheduled for your case with the bankruptcy trustee. In most cases it is at this meeting that your Chapter 13 plan is presented and approved. The proposed monthly payment to the vehicle lender is included within the Chapter 13 plan.
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Tips & Warnings
Legal representation is advisable for a Chapter 13 bankruptcy case. The names of experienced bankruptcy lawyers are available through both the state and local bar associations in your area.
To claim a vehicle as exempt and pay for it during your Chapter 13 plan, you cannot have a luxury car. The vehicle must be a moderately priced automobile or truck. The bankruptcy trustee likely will order the sale of an expensive, luxury vehicle to satisfy your debt owed to your creditors.
