During the three to five years that you make payments on a Chapter 13 bankruptcy plan, you must get an approval letter from your trustee prior to making any new purchase. If you need to buy a new car, talk to your trustee. If you can demonstrate that you need the vehicle and can afford to pay for it, your trustee will probably give you an approval letter.
Need For Vehicle
In general, Chapter 13 bankruptcy trustees will only approve your car loan if you can demonstrate that you truly need a vehicle. If your vehicle breaks down beyond repair and there is no public transportation in your city, your trustee is more likely to approve your purchase of a new vehicle than if you want to purchase a second vehicle or just want a more modern car.
Fits Into Budget
You must demonstrate that you can afford the payments on your new vehicle as well as continue to make payments on your Chapter 13 bankruptcy plan. Draw up a budget before approaching your bankruptcy trustee. Determine how much you can afford to spend per month on a new vehicle and include this amount in your budget. Having a budget will demonstrate financial responsibility and that you put thought into this purchase rather than continuing to practice poor financial habits.
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Type of Vehicle
Trustees are more likely to approve a modest vehicle than a luxury vehicle. Luxury vehicles tend to be more expensive, and your trustee may question whether you need such a vehicle, especially if a less expensive vehicle will meet your transportation needs. Even if you can find a way to afford a high-priced vehicle, your trustee may not provide you with an approval letter because he doesn't see the expense of a high-end vehicle as justified.
What to Do
If you want to purchase a vehicle while under Chapter 13 bankruptcy, make an appointment with your bankruptcy trustee. Bring your budget and a list of potential vehicles to your meeting. Show all your documentation to your trustee and explain why you need to purchase the vehicle. Answer any questions your trustee has. He will make his decision and then mail you the letter if he decides to approve your request. Your trustee may take several weeks to provide a letter after your meeting.