Houses and cars are the two biggest purchases most of us make during our lifetimes. A lot of research goes into making either of these purchases, and both can be life changing. When you buy a new home you are making the decision to plant roots, and maybe raise a family in one spot. When you look at new cars, you have to decide which one will be just right for you as far as size and safety. Safety is usually an overriding factor for car shoppers, especially if your current car is older and does not have the newest safety features. But if you are struggling financially, a new car may be out of the reach of your budget. And if your cash flow is negative, your focus may be on getting out of debt so you can afford a newer car or be better able to pay your bills. One way to get out of debt and back on track with your money is to file for bankruptcy. If so, you may be wondering what options you have for making a house or car purchase if you file a bankruptcy case.
While you are not prohibited from buying a new car if you file for bankruptcy, you should consider these things:
• If you file a Chapter 13 case and that case is not yet complete, you will have to ask the Court for approval to incur new debt. To obtain this permission you will need to show you can afford the payments, and that you have a need for incurring the debt other than just the desire for a new set of wheels.
• Regardless of whether you file a Chapter 13 or a Chapter 7, you need to be prepared to pay a higher interest rate for any new auto loan.
• Any loan you take out to buy a new car will not be subject to the bankruptcy discharge. This means that even after your case is over, you will still owe the debt. If you are not able to make the payments, the lender can repossess the vehicle and can also sue you for the balance due.
Taking on additional debt during or after a bankruptcy is only a good idea if you have exhausted all of your other options, and also only if you are sure you can repay the debt. Bankruptcy is designed to get the honest, but unfortunate debtor out of debt and give them a fresh start. A fresh start may not always include a new car, a new house, or taking out a new credit card. Each case is different, so you should only take on new obligations after careful thought and consideration. Call us today to find out more.
For more information about how bankruptcy can help you, contact us today at www.DsouzaLegalGroup.com. We will go over the facts of your case and let you you’re your next step.