When potential clients come into Steidl & Steinberg for a free consultation, I ask them for some basic financial information. One of the things I look at is their transportation situation. Do they commute by bus? Car? Do they need their car for work? Are they taking care of elderly parents? Are the kids' activities part of their transportation needs? How old are their vehicles? How many vehicles do they have? How many miles and in what condition are they? Are the vehicles from traditionally reliable manufacturers or are their vehicles notoriously unreliable?
Are the vehicles paid for? How much are the monthly payments, and for how long? Are the payments up to date or is the repo person at the door?
I want to make sure that your needs are met with whatever option you might choose. A solution to your financial problems doesn’t work if you can’t get to work or if your kids are stranded. So you should be very relieved to know that in general, vehicle solutions are much easier to come by in bankruptcy situations than one might believe. This is the case in both Chapter 7 straight bankruptcy cases and in Chapter 13 reorganization cases.
Your Car is Safe in a Bankruptcy
You won't lose a vehicle in bankruptcy unless you are voluntarily relinquishing it, or unless I have told you in advance of filing any papers that you have too many vehicles to keep. There are no surprises here. If you owe money on it you will have to pay for it, and sometimes we can get interest rates or balances lowered in Chapter 13. but your vehicle isn't going anywhere.
Then you talk about your car. It has over 200,000 miles and there isn’t enough duct tape to keep it together. You are wondering if you file for bankruptcy, how will you ever be able to get another one since I won’t have any credit?
Our Chapter 7 clients are pleasantly surprised when they get offers from dealers to look at cars while their bankruptcy is being processed. I advise my clients they have to wait until the Chapter 7 is over -- about four to five months from filing the papers -- before they can buy their vehicles.
Chapter 13 situations are a bit more complex . I look carefully at your vehicle situation prior to entering a Chapter 13 Plan. If there is no way that vehicle is going to get you through the term of the Plan, we review options that sometimes include the possibility of buying a car before you file the Chapter 13 papers. This depends on a number of factors but I want to make sure you can get around safely and reliably. If the unexpected occurs and you have to obtain a vehicle while you are actively in the Chapter 13, the Court will approve your purchasing a reasonable vehicle for once we ask for the Court’s permission.
So if you are hesitant to consider any kind of bankruptcy because of your car or truck situation, don't be. Give us a call and set up your free consultation.