Chapter 7 Bankruptcy:
In a Chapter 7 bankruptcy, your non-exempt assets are liquidated to pay off your debts. Vehicles are typically considered assets, and if your car is not exempt under state or federal law, it may be sold to pay off your creditors. If you wish to purchase a new or used car during a Chapter 7 bankruptcy, you will likely need to obtain court approval. The court will consider factors such as your financial situation and the necessity of having a car for work, school, or other essential purposes. If the court approves your request, you may be able to use a portion of your disposable income to purchase a car.
Chapter 13 Bankruptcy:
Under Chapter 13 bankruptcy, you develop a repayment plan to pay off your debts over a period of three to five years. You are allowed to keep your assets, including your car, as long as you continue to make your payments according to the plan. If you need to purchase a new or used car during a Chapter 13 bankruptcy, you will typically need to obtain permission from the bankruptcy trustee and the court. The trustee will evaluate your financial situation and the necessity of having a car for essential purposes. If approved, you may be able to purchase a car using funds available under your repayment plan or through a car loan.
It's important to consult with your bankruptcy attorney to understand the specific restrictions and requirements related to purchasing a car during bankruptcy. They can guide you through the process and help you navigate any challenges you may face in securing a vehicle while in bankruptcy.
