Buying a car despite private insolvency – is that allowed??

Debtors are certainly allowed to enter into new liabilities during the private insolvency process. The only question is whether one’s own financial resources are sufficient for a car, because the attachable portion of income must be surrendered to the insolvency administrator.

A car loan can be an unreasonable liability. If a creditor learns that you are buying a car while your personal insolvency is ongoing, he can apply for the denial of residual debt discharge.

Yes, nothing stands in the way of buying a car once private insolvency has been completed. However, the discharge of residual debt remains stored at SCHUFA for three years. This could scare off potential contractors – whether a bank or a car dealer.

Significance of personal insolvency for the debtor

To what extent is it permissible to buy a car while insolvency proceedings are ongoing?

To what extent is it permissible to buy a car while insolvency proceedings are ongoing??

Before we answer the question of whether you can buy a car during personal insolvency, we need to know the general conditions of these insolvency proceedings illuminate more closely.

For the debtor, the goal of consumer insolvency is to subsequently become debt-free. This granted by the insolvency court Residual debt discharge but is tied to certain conditions:

  • The debtor must attachable assets and income to the insolvency administrator cede.
  • He must not No unreasonable liabilities enter into and also not waste any assets. Otherwise, he is threatened with the denial of residual debt discharge.
  • This also applies if he has his Income situation not disclosed or conceals parts of the assets.

This Obligations make it more difficult the debtor, during his private insolvency a Buying a car. Let’s take a closer look at this.

Buying a car despite private insolvency – pitfalls and obstacles

Interested parties can buy cars from the insolvency estate - as part of an insolvency auction at which the debtor's assets are liquidated

Interested parties can buy cars from the insolvency estate – at an insolvency auction, where the debtor’s assets are liquidated.

During consumer insolvency debtors can not freely dispose of all their income. Because they only Garnishment allowance available, it might be difficult fall, to save enough money, to buy a car despite ongoing insolvency. This rules out car financing from your own funds alone.

An alternative would be a Car loan. But this is also likely to be difficult. This is because the debtor may not create unreasonable liabilities during the insolvency proceedings and also not waste any assets. Who during the private insolvency a Buy a car on credit may want to use it as a means of unreasonable new debt and risks with it its Residual debt discharge – assuming that a bank can be found that will grant such a loan despite insolvency.

Just getting the loan is likely to be a difficult undertaking. Every bank will check the creditworthiness of the customer before granting a loan and has an SCHUFA information obtain. At the latest then it learns of its private insolvency and will refrain from granting a loan due to the high risk of default.

Assuming that the debtor succeeds in overcoming these hurdles and buying a car despite his personal insolvency. Then there is the risk that this Vehicle as attachable assets again falls into the insolvency estate and seized by the insolvency administrator.

Buying a car after private insolvency – a question of creditworthiness and financial strength

In case of doubt, it is better to wait and plan the financing carefully instead of buying a car during private insolvency

In case of doubt, it is better to wait and plan the financing exactly, instead of buying a car during private insolvency.

So it is easier if the debtor tolerated until the insolvency proceedings are completed.

In the next three years after residual debt discharge, his credit rating will usually be assessed very poorly. This is because SCHUFA stores the residual debt discharge in its data for three years. So a SCHUFA report will still be negative long after your private insolvency has been successfully completed.

A Car financing also wants to be well thought out and calculated. Anyone who makes a mistake here and chooses the wrong loan, for example, may end up in a debt trap.

Especially for consumers who only have a insolvency behind him have, this is fatal. You may incur only after ten years again a private insolvency with Residual debt discharge go through.

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