Debtors are 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 one’s income has to be handed over to the insolvency administrator.
A car loan can be an unreasonable liability. If a creditor learns that they are buying a car while private insolvency proceedings are ongoing, they can apply for the denial of residual debt discharge.
Yes, there is nothing to stop you buying a car once you have completed your private insolvency proceedings. However, the residual debt discharge remains stored at SCHUFA for three years. This could scare off potential contractual partners – whether bank or car dealer.
Significance of private insolvency for the debtor
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 must general conditions of this insolvency procedure take a closer look.
For the debtor, the goal of consumer insolvency is to be free of debts afterwards. This discharge granted by the insolvency court discharge of residual debt is, however subject to certain conditions:
- The debtor must attachable assets and income to the insolvency administrator cede.
- He may 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 income situation not discloses or conceals parts of his assets.
This obligations make it difficult for the debtor, during his private insolvency, a to buy 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 – in the context of an insolvency auction at which the debtor’s assets are realized.
During consumer insolvency, debtors cannot freely dispose of their entire income. Because it is only the seizure allowance have at their disposal, it should be difficult fall, to save enough money, to buy a car despite ongoing insolvency. this means that car financing from their own funds alone is out of the question.
An alternative would be a car loan. But this is also likely to be difficult. For the debtor may not create unreasonable liabilities during the insolvency proceedings, and also not wasting assets. Anyone who buys a car during private insolvency buying a car on credit wants to go with it possibly unreasonable new debts and risks so that its discharge of residual debt – provided that a bank can be found that will grant such a loan despite insolvency.
Getting the loan alone is likely to be a difficult undertaking. Every bank will check the customer’s creditworthiness before granting credit and one SCHUFA information obtain. Then, at the latest, it will learn of his private insolvency and will refrain from granting a loan due to the high risk of default.
Assuming the debtor manages to overcome these hurdles and buy a car in spite of his private insolvency. Then there is a risk that this vehicle as an attachable asset again falls into the insolvency estate and is 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 proceedings.
So it is easier if the debtor can tolerated until the insolvency proceedings are completed.
In the next three years after the discharge of residual debt, his creditworthiness will usually be assessed very poorly. This is because the SCHUFA stores the residual debt discharge in its data for three years. A SCHUFA report will still be negative long after you have successfully completed your private insolvency.
A car financing also needs to be well thought out and calculated. Anyone who makes a mistake here and, for example, chooses the wrong loan, may end up in a debt trap.
Especially for consumers who have only insolvency behind him have, this is fatal. you can only after ten years again a private insolvency with residual debt relief go through.
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