If there are 3 years left on a Chapter 13 on a vehicle only and the car is starting to break down can a new car be purchased or are you out of luck?

Answer 1

This question is so fact-specific that it defies an easy answer. Under most circumstances, I would say "yes," you can buy a new car. To buy a new car in Chapter 13 (or to finance anything for that matter), one has to request permission from the Court PRIOR to the purchase by filing a "Motion to Purchase," which describes what one wants to buy, why they want to buy it, and how much it will cost. One normally also has to address what impact the purchase will have on their monthly expenses (Schedule J) and how that may affect their Chapter 13 Plan payment (don't worry, your lawyer will take care of all these details). So long as the Court approves the new purchase, everything's roses. However, the situation may be one in which it is preferable to convert to Chapter 7, surrender the dying car, and buy a new car afterward, or it might be better to stay in Chapter 13 and finance the car, or it might even be best if one dismisses their Chapter 13 and then buys the new car. There are so many factors which could affect which option is in the debtor's best interest that it is imperative for the debtor to consult their attorney. Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts, which I do not warrant, and I am not suggesting any course of action or inaction to any person.