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If I cannot receive a discharge from 13 when file less than 4 years after a 7 how do I ever purchase a new vehicle?

Tioga, LA |

I filed a Chapter 7 bankruptcy due to some issues I was having in my personal life. Less than a year later my wife and I decided we did not want to lose our house so we filed a Chapter 13. At that time, no one told us we would never receive a discharge. Now, everything is complete and closed in my Chapter 13 but banks will not lend us money for a new vehicle because they do not see a discharge for my Chapter 13 on my credit report. They only see the discharge for my Chapter 7. What am I supposed to do? I can't drive these vehicles around forever. I've been driving them for 6 years and they were used when I bought them. I desperately need some help. I've spoke with my lawyer and the only answer she gives me is that the banks need to learn about the way bankruptcy works.

I filed a Chapter 7 6 and a half years ago. I filed a Chapter 13 5 and a half years ago. I was told I will never (Emphasis on NEVER) receive a discharge for a Chapter 13. I have a court docket stating that my bankruptcy case is closed. I have a letter stating that my Chapter 13 is complete and all payments have been disbursed. But... all the dealerships keep telling me that the bank is asking them for a discharge on my credit report. Other than looking for the discharge on my credit report... the banks say I am completely appoved to receive a loan. I am just in desperate need of a new or "newer vehicle".

Attorney Answers 6

Posted

Scott's right, on the bankruptcy side of things, there is nothing to do, and there is nothing you can do. The issue is convincing a car finance guy that the bankruptcy is not pending. You should probably get a PACER account (that is the official bankruptcy court database, www.pacer.gov) so you can pull some documents from your case. Once you are logged in, select "Query" from the top left of the screen, then enter your case number. That will pull up a menu. In that menu, select "case summary". Print that page. The entry of note is the date the case "terminated". That means the case is closed.

Off the top of my head, I don't recall if, in a non-dischargeable 13, there is an order (a document) closing the case. I don't think there will be. But you can back out to the menu and select "History/Documents" and see if there is any thing in the results that might help.

The goal being that you will need to bring this information to the next car finance guy you see for a manual review.

Second, review my AVVO article on the 3 essential steps to rebuilding credit after bankruptcy. (see the below link)

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4 comments

Asker

Posted

Thank you so much. As you probably know from dealing with this on a regular basis, This is a very frustrating process. I had to do this to keep my home for my family but now I am also in need of a vehicle for my family.

Asker

Posted

I have one more question, please. Do you know of anywhere in Government websites where I can find the articles that it is stated about not receiving a discharge from a 13 if not waiting more than 4 years after a 7. It may help if I could find this and present it to a lender... such as in a .gov website or something.

Matthew Scott Berkus

Matthew Scott Berkus

Posted

The code section is 11 U.S.C (United States Code) 1328(f)(1). However, I don't think that will help; they are not going to know what they are looking at. Also, it only says the case won't be discharged, it says nothing about closing. I am surprised you are having these sorts of issues, most car dealers are pretty savvy about this sort of thing and WANT to make a deal. Maybe try going to your bank, or joint a credit union in your area.

Gary D. Bollinger

Gary D. Bollinger

Posted

I rarely disagree with attorney Berkus, but my recent experience with a non-discharged 13 client who is seeking a loan but not getting a loan, leads me to conclude that--although dealers/lenders want to make deals--they don't know how to accommodate a closed, but not-discharged Chapter 13 bankruptcy. There is not a bankruptcy solution. There is a credit solution only if you, the Asker, can find a lender.

Posted

Banks and lenders often don't know Bankruptcy, but in this case it looks like they have it right - you did not get a discharge. You don't tell us the time line? How many years ago did you file Ch. 7 and then Ch. 13. Did you complete a 3-5 year Ch. 13 plan? If so, when? None of this really fixes your issue, but as I am sure you know, two recent bankruptcy cases is a big negative for traditional lenders and the remedy is often the passage of time. Your BR lawyer is not in a position to help you get a loan. Otherwise, keep shopping for loans or maintain your current vehicles.

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Asker

Posted

I filed a Chapter 7 6 and a half years ago. I filed a Chapter 13 5 and a half years ago. I was told I will never (Emphasis on NEVER) receive a discharge for a Chapter 13. I have a court docket stating that my bankruptcy case is closed. I have a letter stating that my Chapter 13 is complete and all payments have been disbursed. But... all the dealerships keep telling me that the bank is asking them for a discharge on my credit report.

Scott Benjamin Riddle

Scott Benjamin Riddle

Posted

You will never get a discharge in that case, and the Bankruptcy issues are over. Asking Bankruptcy lawyers how to get a car loan might not get you very far. Either wait out more time, or look for other lenders. You have no legal issue for lawyers at this point.

Asker

Posted

Ok, so it should be possible for me to get a loan is what you are saying and I just need to work harder? I'm just getting frustrated because I've already been turned down by about four lenders but I do know I put myself in this position so it's no ones fault but my own. I just need to know if it's possible for me to move forward with this process. With my current credit scores and monthly income I was actually approved to get into two vehicles in one day (An SUV and a Truck) but it was all pending the discharge issue, which I will never receive.

Scott Benjamin Riddle

Scott Benjamin Riddle

Posted

I'm saying that you are asking lawyers about how to get car loans. We are not bankers. You should be asking bankers and lenders.

Asker

Posted

Okay, thank you for your attempt to help... I just wanted to know if there was anything legally that I could do to help this issue or am I actually in a state as far as a legal stand point goes that I should be able to go forward with this process and I just have to work harder on the banking side.

Asker

Posted

I have one more question, please. Do you know of anywhere in Government websites where I can find the articles that it is stated about not receiving a discharge from a 13 if not waiting more than 4 years after a 7. It may help if I could find this and present it to a lender... such as in a .gov website or something.

Posted

You may not remember, but not only were you told you would not receive a discharge, they probably made you sign a waiver of discharge.

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Asker

Posted

Ok... Given that, If I did forget. How do I go forward now? Is there anything to do? What is my best plan of approach. I just desperately need to get in a new vehicle.

Asker

Posted

I have one more question, please. Do you know of anywhere in Government websites where I can find the articles that it is stated about not receiving a discharge from a 13 if not waiting more than 4 years after a 7. It may help if I could find this and present it to a lender... such as in a .gov website or something.

Ray Choudhry

Ray Choudhry

Posted

http://www.law.cornell.edu/uscode/text/11/1328 Look at Para F

Posted

The best approach is to get a copy of your chapter 7 bankruptcy listing all of the debts that were discharged and a copy of you chapter 13 bankruptcy indicating (presumably) that the only debt addressed in that bankruptcy were/was the mortgage arrears. That along with copies of your credit report should show that you have been discharged from all of your obligations and debts. you can then sit down with a finance person and show them what occurred and that should satisfy them.

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Posted

The trustee in a Chapter 13 will do a motion to object to the discharge (or really an adversary) which you got notice of so the clerk won't enter one in my district. I would fathom this is standard procedure in all districts.

The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of Illinois. Responses are answers to general legal questions and the receiver of such question should consult a local attorney for specific answers to questions.

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Posted

I have a better answer. Don't finance your next vehicle purchase. Keep your current vehicles in good running condition while at the same time saving up money to purchase a used vehicle for cash. It really works. My wife and I have not financed a motor vehicle in the last 28 years since we were married. It's a lot of work looking for the right vehicle, saving up to buy it, and keeping our current vehicles in working order while trying to find a new vehicle. But it works! Good luck!

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