When Texas residents file for bankruptcy, they will be given an automatic stay from creditor collection actions. This may enable them to keep their vehicle while a bankruptcy case is ongoing. However, it may be necessary to pay any outstanding balance owed and keep up with current payments. Those who wish to purchase a vehicle while their case is pending may be able to do so with trustee and court approval.
The court will look at whether the vehicle purchase is necessary and account for how it may impact a current repayment plan. It may be necessary to attend a hearing on the matter. The trustee will want to know what type of car a person is buying, how much the down payment will be and what the interest rate on the proposed loan is.
After a bankruptcy, an individual may benefit from having auto loan debt or other debts discharged. This may make it easier to get approved for a car loan after a bankruptcy case ends despite a lower credit score. Buyers should be prepared to pay a higher interest rate as well as make a significant down payment. It may also be necessary to work with a subprime lender to get a deal done.
A Chapter 13 bankruptcy may allow a person to repay debts over three or five years. Payments are typically made according to a plan approved by a bankruptcy court. There are a variety of eligibility and other requirements that an attorney can outline while examining other forms of debt relief that might be available.