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If you’re going through or have filed for bankruptcy we can help .
The Process of Auto Financing Following Bankruptcy
If you’ve filed for bankruptcy, you might feel like you’ll never get approved for another line of credit again. Fortunately, that is not true. At Auto Credit Express. we have been helping bankrupt clients find bad credit car dealerships in their area to approve them for vehicle financing since 1999. Bankruptcy isn’t the end of the world. It’s a new beginning to financial stability
Open Bankruptcy Auto Loans
After you have filed your bankruptcy papers with the court, your bankruptcy is now considered open. It will remain that way until you receive your discharge papers from the judge. Open bankruptcy auto loans may be made available during this time with both Chapter 7 and Chapter 13 bankruptcies. but with different requirements.
A chapter 7 bankruptcy is open for approximately three to four months making the process a little faster. Before you can apply for an auto loan through any subprime lender, you must make sure that your meeting of creditors has taken place. Legally, this is called the 341 meeting and allows the creditors listed on your BK papers to ask you questions about your debts. Lenders wait for this meeting to be completed before offering financing to debtors because:
- After this meeting, you can no longer add debts to your bankruptcy petition, and therefore, the new car loan will not be discharged in the bankruptcy process.
- Should your case be dismissed by your bankruptcy judge for any reason, you are still liable for the balance of the loan.
- Your creditors have agreed to the terms of the bankruptcy and your debts will be extinguished, lowering your debt to income ratio.
After you have proof of completion, you can then apply for an online pre-approval at Auto Credit Express. Keep in mind, however, that because a Chapter 7 bankruptcy happens so quickly, your loan approval chances will significantly improve if you delay applying until you have your discharge papers.
If you’ve filed for Chapter 13, you have a little more leeway when it comes to car loans during bankruptcy. The process is much longer, lasting three or five years. The court appointed trustee will set up a payment plan based on your income, and you will repay a portion of your debts over the life of the bankruptcy. If you plan to apply for financing of any kind during this time, you must get approval through your trustee.
Compile a list of reasons as to why you need a new vehicle to present to the court. For example:
- More than one person in the house has a job, so you need two cars.
- One person works while the other drives kids to school or extra-curricular activities.
- You have one car that is about to die, and you need a reliable vehicle for the family.
Once you have compiled your list, you must then file it with your trustee. This is called a Motion to Incur Additional Debt. Then you may have to answer questions about the vehicle you want to purchase. There could be stipulations added to the loan terms, including how long the loan is, what your interest rate can be, and what your monthly payment must be. If your motion is accepted, you will receive an Authorization to Incur Additional Debt. Once you are authorized, you can proceed with your purchase.
After Bankruptcy Car Financing
Taking out a new line of credit can be stressful regardless of what your credit score is, but when you have a recent bankruptcy on your report, your anxiety level can skyrocket. You don’t know how long you should wait, if you should wait, or if there is even a chance for an auto loan approval until the it falls off your credit report. We are here to tell you, you don’t have to wait or worry at all.
At Auto Credit Express, we understand that it isn’t always an option for you to wait weeks, months or years after bankruptcy before taking out an auto loan. This is why our network of lenders can offer you auto financing as soon as your discharge papers are in your hand. While most of our bad credit car dealerships offer both new and used vehicles, we highly recommend purchasing a pre-owned car, truck, SUV, or minivan. Late model automobiles generally offer the following benefits:
The used cars offered on our dealers’ lots are not the junky automobiles of yesteryear you may be thinking of. Instead, you will be financing a vehicle that is reliable, runs well and has low mileage.
“I never had anyone work so hard to find the best deal for my situation.” Deborah S. Ovid
Vehicle Options in Bankruptcy
If you decide to reaffirm your loan, you are signing a legally enforceable contract to repay the entire loan balance, as if the bankruptcy was not occurring. Both the creditor and debtor must agree on the terms, and usually a lender will not sign this document if you are currently behind on your payments, or have a history of late payments.
Before you make any decisions about keeping your vehicle, you must first gain permission from either the trustee or the judge working on your case. They must see that keeping the debt is not going to create a financial hardship on you or your family.