Can I Buy A Car Before My Bankruptcy Is Discharged

A bankruptcy is a difficult time in most people’s lives, but it doesn’t have to put your life on hold. You may be surprised to here this, but you can still get bankruptcy auto loans. More and more people these days find themselves declaring bankruptcy through no fault of their own, and many companies and lenders are aware of this situation. A bankruptcy does not have to stop you from getting a car loan, though there are some complications with specific bankruptcy types.

There are two types of bankruptcy that households may go through: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is the type that most people are familiar with. It liquidates all of an individual’s assets to pay off their debts, and the rest of the debts that are not covered by the individual’s assets are wiped out. Chapter 13 bankruptcy is a little more complicated because under it, an individual agrees to a repayment plan. They keep their assets, but without the right to take on more debt.

Whether or not an individual can get an auto loan with a Chapter 7 bankruptcy on file is entirely up to the lender. Most lenders will not loan to someone with a bankruptcy that’s still on file, but many in-house dealerships will be willing to overlook this for someone who otherwise qualifies for the monthly payments. In-house financing is probably the best choice for those with bad credit or a bankruptcy that’s still on file, since financing is almost guaranteed and the rates will be reasonable.

A Chapter 13 bankruptcy, however, is a little more complex of an issue. An in-house financing dealership will work with you, but if you are still in your 3-5 year repayment period on your bankruptcy you may have issues with the government if you take on more debt. Because of this, it is important to reach your bankruptcy attorney and discuss the ramifications. However, if your repayment has already been made and the bankruptcy is simply lingering on your credit report, then the in-house auto dealership should have no problems with financing you for a vehicle.

Not only is it possible to get a car financed through an auto dealership while your bankruptcy is still on your credit report, it’s actually beneficial. This is one of the few ways that you can start rebuilding your credit while other lenders will not let you borrow. By keeping your dealership loan up-to-date, you will be preparing a solid foundation of credit for when your bankruptcy finally drops off your file.

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