May
10
How to Get a Car Loan after filing Bankruptcy
May 10, 2007 | 13 Comments
If you’re reading this, you’ve probably already filed bankruptcy or are about to. Thanks to some recent changes in bankruptcy law, there’s about a 50/50 chance you filed Chapter 7. For those of you who did so, this guide will tell you how to get your credit re-established in 12 to 18 months. For those of you who filed chapter 13, this guide will help you re-establish but you must adjust your time frame to more closely match the term of your repayment schedule.
…
GREAT NEWS! Getting a car loan after filing for bankruptcy is easy. In fact, completely restoring your credit after a bankruptcy is easy.
But before I tell you how to use the credit system to re-establish, there are some ground rules:
Make sure you never miss a payment while you’re trying to re-establish. Missing one measly payment by as little as two weeks will set you back MONTHS. If you’re one of those people that have a hard time remembering to make payments (you’re not alone), remember that you can often have them automatically taken out of your account. A lot of banks will even print and mail payment checks for a nominal fee. But whatever you do, DON’T MISS ANY PAYMENTS — I can’t emphasize this enough.
Don’t let anything go to collection. Sometimes when you emerge from bankruptcy your tendency is to ignore collection notices you receive because often times they are for debts that were included in your bankruptcy. But, just to be safe, take a moment and make sure the collection notices apply to debt that was included — if the debt was included inform the collection agent so they don’t accidentally file a collection against you and ruin your credit re-establishment process. If your old creditor makes a mistake and files a false collection, your credit will be hurt until you can get it corrected. If you do end up with a collection on your credit that was filed after your bankruptcy you’ve got to get it taken care of before you can re-establish.
If you get a collection notice for a debt that wasn’t included in your bankruptcy, pay it or dispute it immediately. For tips on beating collections, read Working with a Collection Agency.
One more thing — you can’t start to re-establish credit until your bankruptcy is discharged.
Now that we’ve gotten that of the way…
Read Getting a Car Loan after Bankruptcy — Step One: Put Your House In Order
Related Posts
Comments
13 Comments so far
That’s some great information, you can never be too careful with auto loans.
Do you have any info on getting a car loan while your chapter 13 case is still active? I am getting denied because the lenders are afraid I’ll convert my 13 to a 7. But I really can’t because I make a decent salary. Yet I need a reliable car to get to work. Do you know of any lenders that are willing to give mid-chapter 13 loans?
Jay, Prestige Financial can give car loans to people in active 13 cases. They’re not nationwide but they’re in 20 or so states — not sure where you are. The rates start off pretty high (cause you’re in bankruptcy!) but they drop your rate every few months if you make your payments on time. Their website’s GoPFS.com Goo dluck.
hi, i have just filed chapter 7. i did not include my car/payment. i had to file because the credit card companies were doubling my payments, and i just could not handle it on my own. i have always paid my car, utilities, rent, insurance, on time. always. but when i was backed against a wall, i had to make a decision, and i had to let the credit cards go. so my credit turned bad, but if you call citicorp, i have never ever been late with acarpayment. geico the same. my rent the same, utilites the same. now my truck is breaking down my warranty is over, and i will be needing a new or used truck. so where do i stand if anywhere?
Harriet — unfortunately, the bankruptcy has damaged your credit. But that’s not as bad as it sounds. You clearly understand the importance of credit and making payments on time, and I’m quite confident your credit will rebound quickly. Take a look at our notes too – even if you don’t plan to buy a car, there are a lot of good tips on getting your credit back in shape.
I am need of buying a car. I have been off work for a year. I have the means of making a payment and I have found a vehicle, but because of my credit I was told I could not purchase the car.
I filed for chapter 7 on Dec 15. I did include my car loan i currently have. but i have not had that car for more than a year. i do not plan to pay off that car so i will be needing to purchase another car within 90 days. what is the best solution to this problem?
dear kassie,
you are not going to be able to do anything until your bankruptcy has been discharged. i do not know what the situation would be now that there is the huge credit crunch. i actually had no problem getting another car. car dealers were sending (me) letters to come to their dealerships. except toyota. i don’t like toyotas anyway!!! but if you do get a loan the finance charges are quite high. and that is even if there was not a credit crunch. they just want to stick it to people that have filed bankruptcy. so they do it through the finance charges. hope i was helpful.
None of these answers are good answers, they all go around the question
I just had my bankruptcy discharged and need a car. I work for myself and do not have a ‘pay stub’. I’m having an impossible time getting a loan. Any suggestions? I’m in IL.
Hi I have file a Chapter 7, included in my bankruptcy was my auto because with the finance company i would have been upside down in it, My chapter 7 has been discharged and now i cannot get a loan for a vehicle. Where did i go wrong
I just filed chapter 7 a month ago, and my leased car is about to be repossessed. I don’t have another car, and i will need to get one soon. i have the means to pay for a car, but I am afraid no one will sell me a car. Does anyone have any idea as to how I can get a car that I can afford?
vazken – There are lenders who will work with someone currently in the middle of a bankruptcy. Your attorney can recommend one. Otherwise, check with your local “buy here pay here” used car lots.