Can I buy a car while in Chapter 13 repayment?

Chapter 13 bankruptcy can offer a way for Americans struggling with debt to obtain a fresh financial start.  In a Chapter 13 bankruptcy, you will commit to a repayment plan that will last between three and five years.  It will be imperative for you to develop a strict budget during repayment so that you can meet your financial obligations.  Even with the best of budgeting, however, unexpected needs will arise.  Those going through Chapter 13 may find themselves wondering whether they can purchase a new car, home, or other large item. Our Ohio Chapter 13 bankruptcy attorneys at Miami Valley Bankruptcy discuss tips for managing your expenses during repayment.

Set a Realistic Budget

Your Chapter 13 bankruptcy will only be a success if you can meet your repayment obligations.  In order to accomplish this, you and your attorney will need to develop an accurate budget.  Your budget should take into account your likely medical expenses, travel costs, mortgage payments, and the like.  Sticking to your budget will prove vital to the ultimate attainment of discharge of your debts.

Prepare to Handle Extraordinary Expenses

While your goal during a Chapter 13 repayment plan is to eliminate debts, not incur them, there is a possibility that you will find yourself needing to take on new debts during the repayment period.  The Bankruptcy Code allows you to incur new debt, but you will likely need to get the court’s permission.  You could find yourself struggling to meet the following extraordinary costs:

• A new vehicle:  Often, Chapter 13 filers find themselves in need of purchasing a new vehicle during repayment.  It can be difficult to obtain financing while currently going through bankruptcy.  You can petition the court for permission to purchase a vehicle on credit, then search for the best possible deal.  
• Medical costs:  Medical expenses are considered new credit under the Bankruptcy Code.  Inform your trustee of new medical costs and make a plan to pay any medical costs you may incur during repayment.

If at any time during your Chapter 13 repayment you find yourself unable to meet expenses, needing to take out loans, or you experience a significant change in your finances, contact your bankruptcy attorney and bankruptcy trustee for assistance.