How to Finance a Car Loan During a Chapter 13 Bankruptcy


Under a Chapter 13 bankruptcy, you must make structured payments to each of your existing creditors each month. The last thing you want to do is add a new credit obligation like a car loan to your existing debt. However, if you need a car, you can usually get a loan despite your bankruptcy if you follow the proper procedures.

Things You'll Need

  • Budget
  • Letter of permission to incur debt

Contact your bankruptcy trustee or attorney. Get a letter of permission to incur debt from this person. The letter states that the new loan will not be part of the bankruptcy and sets limits on how much you may spend and what your monthly payment amounts can be. Your trustee will probably authorize only a few hundred dollars per month, according to

Call a car dealer. Be honest about the fact that you have a bankruptcy on your record and tell the dealer how much you are able to spend per month. Ask the dealer if he has any vehicles for sale that fit your budget and if he will be able to approve financing for you.

Be prepared to speak to several car dealers. Bankrate says that many car dealers may be reluctant to work with you, but eventually you can find a car dealer who will.

Visit the car dealer. Bring your letter of permission to incur debt with you. Check out the car the dealer offers you carefully. Take it for a test drive and have it evaluated by a mechanic before purchase. According to, low-priced used cars may have hidden problems that will cost more in the long run.

Tips & Warnings

  • If you can possibly wait to finance your car loan, do so. The more time that passes after your bankruptcy is filed, the better rates you will be able to get.

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