Many people recognize the need for a change in their financial lives. For many households filing bankruptcy is the necessary change to allow for a future free of debt. However, many people are afraid that once they file for bankruptcy they will never be approved for a car loan and this fear leads them away from discussing their bankruptcy options with an attorney.
If you and your bankruptcy attorney decide that a Chapter 7 bankruptcy is the best option for your situation, then your bankruptcy case will likely be open for 90-120 days. Your case may be open longer if the trustee has requested your tax refund or you have valuable non-exempt property. Most auto lenders will not require your case to actually close before reviewing a car loan application, but only require the filing of a Discharge in your case. The Discharge is usually filed 90 days after your case is filed.
The possibility of being approved for a car loan increases as more time passes after your bankruptcy case. Even shortly after your Discharge you are likely to be approved as long as you meet the usual requirements such as stable employment. You will likely be offered a loan with a higher interest rate and may be required to make a down payment. Be sure to only accept a loan that does not contain an early pay-off penalty. This will allow you to refinance your loan after a couple years and possibly take advantage of better interest rates, as long as you have been rebuilding your credit responsibly.
If you file a Chapter 13 bankruptcy, you are unable to incur any new debts without the Court’s permission while your case is open for the 3-5 years.
There is life and credit after bankruptcy, so if you need to start over bankruptcy can be the solution to your debt worries. Contact us today for your free consultation – we will take the time to review your options.
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