A Chapter 13 bankruptcy takes a long time — three or five years, dependent upon your agreement with the bankruptcy court. In that time, your financial circumstances and also your needs can change dramatically.
For instance, your five-year Chapter 13 bankruptcy agreement may have allowed you to keep your vehicle. But a lot can happen to a vehicle over five years. Auto accidents, hurricanes, storm damage, thefts or mechanical breakdowns can all render your vehicle inoperable.
Can you buy a car when you’re under bankruptcy?
As long as the bankruptcy court is informed and doesn’t object, and if the trustee agrees you can afford it, you can buy another car. The problem then is finding a lender who will agree to finance the purchase to a buyer who is in bankruptcy.
You might qualify for a conversion
It might be possible to convert your Chapter 13 bankruptcy to a Chapter 7. When financial circumstances change for the worse, e.g., due to terminations, lay-offs or furloughs, you can file a notice of conversion with the court. The court will then assess your eligibility for a conversion (typically through a means test).
If you prove these changes leave you unable to meet your agreement with the bankruptcy court and otherwise qualify, your Chapter 13 bankruptcy can be converted to Chapter 7. Be aware that this restructuring can involve surrendering your formerly exempt property. You must weigh your decision carefully to make the right choices.
A swift end to your bankruptcy
Since Chapter 7s are completed in months and not years, your debts get discharged much faster. Then, you can begin to rebuild credit and qualify for loans. Since bankruptcy laws are complex and frequently adapted, seeking guidance and advice is prudent before taking any action on your case.