Bankruptcy

What if you need a new car in a bankruptcy

By info

Many bankruptcy filers enter into a Chapter 13 case with a car lease.  However due to the 60 month duration of their case, their lease expires before they receive a discharge of debt.  As such, many Debtors have a need to either purchase their existing lease or to enter into a new contract. The problem is that many times the fee to do so is more then what was listed on Scheudle J.  The challenge that you may face is in order to spend more money while inside your bankruptcy, you may need to obtain court approval and to demonstrate how you will be able to make the payments.  Moreover, the Court will want to know why you should be allowed to spend more money and pay your creditors less. 

Attorney Bill Balena, has posted a great article on his Ohio bankruptcy blog about what goes into such a motion including:

The way to address this matter is by filing a motion with the court.  This is something that your attorney should do for you.  As with everything else in a Bankruptcy case these days it is all about paper.  A successful Motion to Lease or Purchase a Vehicle in Cleveland should include:

• The proposed contract.  For an automobile purchase or lease the dealer will not give you this document.  Heck, he doesn?t even have it until the day you go in to sign on the dotted line.  The court will accept a deal sheet made out by the salesman.
• A statement of the basic terms of the deal.  Include amount borrowed, loan or lease terms, amount and source of down payment, and interest rate.
• The reason for the proposed lease or purchase.
• Comparison of your existing transportation costs to the anticipated new costs.
  • If new cost is higher explain how you are going to cover the increase
  • If it is lower, explain how you intend to apply the additional disposable income (they get you coming and going).
• A statement of any connection you might have with the lender or Lease Company, or an affirmation of no such connection.

To read his complete blog, click here.

Full post as published by Bankruptcy Articles & Blog on April 21, 2010 (boomark / email).