Credit is available for vehicle financing immediately after filing a Chapter 7 bankruptcy states Lake Villa bankruptcy lawyer. Auto lenders and auto dealers will pull your name from the public record of filers and they will solicit you to come in for financing, often times before your bankruptcy case is even complete. That process of offering credit or financing while you are in a current Chapter 7 bankruptcy is known as open bankruptcy financing. It’s a relatively recent occurrence but more and more finance companies realize that once you have filed for the bankruptcy, you are likely going to go through with the case and you are not going to be able to file another bankruptcy case for eight years. Thus, they want to get you into their vehicle and utilize their finance company before all the other common solicitations will, based on the discharge. This open bankruptcy financing is available in Chapter 7. It is also available in Chapter 13. Thus, it is available in all Illinois bankruptcy cases. The main difference however is in a Chapter 13 bankruptcy case, you as the debtor will have to bring a Motion for Approval of the Additional Credit because you are already in a repayment plan under Chapter 13.
Many clients wish to purchase a vehicle when they are in a Chapter 13 either because their current vehicle is no longer running or they didn’t have a vehicle and now they want a vehicle. In those circumstances, the client must bring proof of the type of vehicle that they wish to purchase with the approximate dollar amount that’s going to cost plus the financing and plus the monthly charge. I as their bankruptcy attorney will then bring a Motion to Obtain Additional Credit while in a Chapter 13. The important thing about that Motion for Additional Credit is I must show how the debtor is going to be able to pay for this new credit since it’s not going to be wrapped into the bankruptcy Chapter 13 case. In other words, the bankruptcy plan payment is determined on their budget, income minus expenses. This additional credit, let’s say it’s $275 for a car payment over the next 52 months. We have to show how the debtor is going to pay the additional $275 per month outside of the bankruptcy.
Your bankruptcy lawyer will be able to sit down with you and go over your budget. It is at that time in which the viability of additional credit can be assessed.