Montevallo, AL asked in Bankruptcy for Alabama

Q: I’m currently in chapter 13, my husband and I tried to get a car through our bankruptcy and got denied. HELP!

My car is on its last leg, and we don’t quite have enough yet to pay for something decent with cash. Can we go to a buy here pay here that offers no credit checks? All they ask for is ID, proof of income and insure and down payment. Would we get in trouble and get kicked out of bankruptcy? Or are we better off asking someone to finance for us and making the payments?

Related Topics:
2 Lawyer Answers
Kevin M Ryan
Kevin M Ryan
PREMIUM
Answered
  • Bankruptcy Lawyer
  • Loxley, AL
  • Licensed in Alabama

A: The answer to this question could vary depending on what bankruptcy district your case is pending in. I practice in the Southern District of Alabama, which has a very reasonable and workable approach to getting Debtors in a position to replace or purchase a vehicle while in Chapter 13. The process involves the Attorney for the Debtor filing an application with the Court for the legal authority to borrow funds ( currently at time of this post the Court will generally approve an auto loan up to $18,000.00 with a maximum loan payment of $450.00 per month). The Debtor is required to obtain Court approval before moving forward with a loan or borrowing any funds usually over $500.00, because the Debtor's future income and earnings are under the Bankruptcy Court's jurisdiction. If you have a bankruptcy lawyer for your case, and hopefully you do, make sure you reach out to your attorney and ask about his or her filing a motion for authority to borrow funds to purchase the vehicle. In our district, the Court will issue an Order with the terms requested up to a max loan of $18,000 and max payment of $450.00 per month, and the Debtor can take a copy of this Order to their bank, credit union or finance company to get pre-approval for the loan before searching for a vehicle.

Timothy Denison agrees with this answer

Timothy Denison
Timothy Denison
Answered
  • Bankruptcy Lawyer
  • Louisville, KY

A: You need to obtain approval from the Court to incur new debt prior to doing so, but the Court will generally allow you to do so, especially in instances where your current vehicle is sbout to die.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.