You must have court approval to finance a car in an open Chapter 13 bankruptcy. If you get a loan without it, your bankruptcy could be rejected. A Chapter 13 debt authorization is a court order that allows you to fund additional debt while bankruptcy is still open. We can walk you through the steps to obtain authorization.

Buying a car with an open Chapter 13 bankruptcy

The process of financing a vehicle with an open Chapter 13 bankruptcy may take a while – your trustee needs to agree, you need court approval, and it can go to a hearing. Depending on your case, it may take over a month for you to be approved.

Obtaining authorization begins with your visit to a local dealership. Upon arrival, you must explain your situation to the special financial manager. If they can work with you, the next step is to pick a reasonably priced car and list the information on a sample buyer’s order.

In addition to vehicle information, the buyer’s order lists loan information such as maximum term, interest rate, and monthly payment. Make sure the dealership lists “or similar” next to the car you choose.

This is in the event that the vehicle is sold before you are approved by the court. Without this stipulation, you will have to start the process again if the car is sold in the meantime. With it you can continue with the existing buyer’s order and a similar pricing model.

From there, you take the buyer’s order sample to your trustee. They review it and if they conclude that the reason for purchasing this vehicle is valid and the payment will not affect your current repayment plan, they file a motion to incur debt with the court.

The petition is also sent to your creditors and a hearing may be required. Your creditors can attend the hearing and even oppose it. If all goes well and the court approves the petition, you receive an authorization to incur a debt or an order to incur a debt. At this point, you can return a copy of the order to the dealership and complete the car purchase process.

When you don’t have court approval

Now that you know what it takes to get a motion to incur a debt, what if you try to finance a vehicle without court approval? Well, like we said before, it’s a slippery slope to walk on and you could face legal action.

If you decide to buy a car through a Buy Here Pay Here dealership – most of which don’t perform a credit check – and your trustee or the court finds out, a number of things can happen. produce:

  • Your bankruptcy could be rejected.
  • You could be sued by your creditors.
  • You could lose your vehicle in the event of repossession, which would further lower your credit score.

The bottom line is this: Get court approval for a loan before signing finance contracts. The consequences of going around the field and behind your trustee’s back are not worth it and can put you in an even worse situation.

If you have any questions about financing a car with an open Chapter 13 bankruptcy, please feel free to contact your trustee and discuss it.

Need help finding a dealer?

Once you’ve been approved by the court and your trustee, the process of buying a car in an open Chapter 13 bankruptcy can go quickly. However, to begin with and find a dealer to work with an open bankruptcy can be a challenge in itself, and that’s why we want to help you.

TO Auto Express Credit, we work with a nationwide network of dealers who specialize in helping car buyers with bad credit get the financing they need, even those facing open bankruptcy.

All you need to do to start the matchmaking process with a local dealer is complete our auto loan application form.


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