Thursday, June 27, 2013

Financing a Vehicle During Chapter 13 in Oregon

Considering that a Chapter 13 in Oregon can last anywhere from 3 to 5 years it is no surprise that some debtors will need to finance a car during that time. Sometimes their prior car has been wrecked, broke down, or they have some other reason to need a car.

If you are in an active Chapter 13 in Oregon and need to incur debt you must get the Trustee's approval before you can enter into the new loan.  Although the goal of bankruptcy is to get away from debt the Court and Trustee understand that sometimes getting financed for something like a car is necessary.  I mean, you need a car to get to work so you can continue to make your payments, right?

The most common type of consumer financing while in chapter 13 is for a vehicle. There are a few lenders who deal directly with debtors in chapter 13 to help them get into an affordable car loan.  If you have an attorney they should be able to refer you to a couple of places to help you out.

The Trustee in Portland has set out the following guidelines and are the limits of what a debtor can finance:

Loan Amount: Not to exceed $14,000.00
Monthly Payments: Not to exceed $400.00
Loan Term:  24 to 60 months
Interest Rate:  Not to exceed 29%
Down Payment: 5% to 10% down
Vehicle Type:  Suggested mileage not to exceed 100,000
   Service and Safety inspection performed
   Extended warranty may be allowed
   Luxury vehicle or SUV usually not allowed.

Once you have found a car and a willing lender you will want to obtain what is known as a "Vehicle Purchase Request".  Again, if you have an attorney they should be able to send you this form right away. Once the form is completed you will need to have the Trustee sign off on it before you can incur the new debt. If the form is completed, and you fall within the Trustee's guidelines you should get the approval pretty quick.

Keep in mind that you will likely  need to complete and file an new budget (schedules I and J) with the bankruptcy court to account for the new car payment.  Your attorney should be able to help you complete those items.