A car sits on a desk with a chapter 13 note sticking to it

Getting a Car Loan While in Chapter 13

Milad Hassibi March 8, 2019


Going through a bankruptcy can be a difficult time for many Americans. While Chapter 13 reorganization bankruptcy can leave a negative mark on your credit, you can still find a dealership willing to help you get into a new car.

How to Get a Car Loan in Chapter 13 Bankruptcy

A chapter 13 filing is designed to take a person’s past debts and create a payment plan which can last anywhere from three to five years. A person is also required to pay for the cost of bankruptcy themselves. Since filing for Chapter 13 can be more time consuming than Chapter 7, you may find yourself in need of a vehicle.

A bankruptcy trustee hands the keeps to the Chapter 13 bankruptcy client

Steps to Take

If you’ve decided you need to purchase a car in the middle of filing for Chapter 13 bankruptcy, there are three steps you must take in order to get approved by the bankruptcy court.

  • Find a Lender – Quite possibly the hardest step is finding a lender or dealership that is willing to work with you and your Chapter 13 bankruptcy filing. Your first stop should be your local bank or credit union. If they are unable to provide any financing, you may have to work with a subprime car dealership such as a Buy Here Pay Here dealership. These types of lenders work with bad credit consumers and can usually help regardless of bankruptcies, evictions, or foreclosures. Once you’ve found one that can work with you, you need to work out the term of the loan and ask the dealership to write up a buyers order.
  • Visit your Bankruptcy Trustee – After you find a leader or dealer, you will need to take the buyer’s order to your trustee. Then the trustee will ask you to fill out paperwork explaining why you need the car. This is where choosing a practical car is beneficial.
  • Wait for the Court – Once you speak with your trustee, he/she will file a “Motion to Incure Additional Debt” within the court. The information will be sent to all your creditors that are listed in the bankruptcy repayment plan. The creditors to have the legal ability to object your claim and hold a meeting if more than one objects. If the court approves your motion, you will take the paperwork provided and give it to the dealership. If the court denies your claim, consider choosing a less expensive vehicle.
Get a Car Loan with Any Credit Along with a Happy Couple and a New Black SUV next to them

Getting a car in the bankruptcy process can be difficult but not impossible. The courts understand that consumers will still need a vehicle to go about their daily lives. When looking for a new car, choose the most economical and practical car you can find to help increase your odds of approval from the court.

Final Note

It can be hard to find a dealership or lender that is willing to assist somebody in the middle of a Chapter 13 filing. If you are in the bankruptcy process and are in need of a new vehicle, CrediReady can help. Our nationwide network of lenders and dealers are ready to approve you! Take a moment to fill out our 100% free no-obligation loan inquiry form to get into your new vehicle today!



Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.
get your free score

Auto Insurance

Get your free insurance quote now! Save big on auto insurance today!
get your free quote

Vehicle Warranty

Protect your vehicle and you could save thousands on auto repairs.
get your free quote