How Soon Can I Finance A Car After Bankruptcy?

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After filing for bankruptcy, many people worry about how long it will take to rebuild their credit and make big purchases like a car. The good news is that getting a car loan is possible relatively soon after bankruptcy, but it depends on a few things.

The Type of Bankruptcy You File

• If you file for Chapter 7 bankruptcy, your case typically lasts about 3-4 months from the date you file to the date your debts are discharged. Once your debts are discharged under 11 U.S.C. § 727, you are no longer legally obligated to pay them, and you can start focusing on rebuilding your credit.

• If you file for Chapter 13 bankruptcy, you’ll be in a repayment plan for 3-5 years. However, you might be able to get a car loan before the plan is completed, but you’ll usually need court approval to take on new debt under 11 U.S.C. § 1305.

Credit Rebuilding After Bankruptcy

To improve your chances of getting a car loan with better terms:

• Start rebuilding your credit by making payments on time for bills, rent, or any reaffirmed debts (debts you agreed to keep paying during bankruptcy).

• Consider getting a secured credit card, which is a credit card backed by a deposit you make, to show lenders you can handle credit responsibly.

• Keep an eye on your credit report for accuracy after your bankruptcy. Under the Fair Credit Reporting Act (FCRA), discharged debts should show as $0 owed and not “delinquent” or “past due.”

What Happens If I Fall Behind In Payments After Filing a Chapter 13 Bankruptcy?

The impacts of falling behind on payments in a chapter 13 case vary depending on the circumstances. Chapter 13 allows debtors to repay their debts through a structured payment plan over 3 to 5 years, which helps manage debts and avoid foreclosure. If it is the first time that the filer has fallen behind and they are only a few days behind, there may not be any impact at all. If the filer has fallen behind several times and they are several months behind, then it could result in a dismissal of the case. Usually, if a consumer is falling behind, they should communicate with their attorney so that proactive steps can be taken. They should try to get their payments back on track as quickly as they’re able to. Contact the attorneys at Ziegler Diamond Law: Debt Fighters in Florida for a free case evaluation today. Attorney Mike Ziegler founded our law firm on the principles of professional quality and personal care.

What Is The Reaffirmation Agreement And How Does It Work?

A reaffirmation agreement is an agreement that’s filed within the bankruptcy case, and it essentially asks the bankruptcy judge to make an exception for whatever the debt is. Oftentimes, reaffirmation agreements are applied to car loans. In some instances, they are applied to mortgage loans, and in other instances, they are applied to other secured debts, such as financed furniture. A reaffirmation agreement essentially discloses the terms of the loan and discloses how much money is in the bankruptcy filer’s budget. It also asks the court to allow the filer to keep the loan in light of what should be the available income. In some instances, a judge may decline a reaffirmation agreement if they feel that the terms are unreasonable or if the payment is unaffordable to the filer.

Can Someone Make Payments On a Discharged Debt Without A Reaffirmation Agreement?

In most cases, lenders will allows a bankruptcy filers to keep their vehicle, even if it isn’t reaffirmed, so long as the borrower continues to make payments. There can be exceptions to this general rule, which in practice tends to happen more offen with credit unions. Likewise, continuing to make voluntary payments after bankruptcy is not limited to secured lenders. Its not unusual for a bankruptcy participant to make voluntary payments where they have a relationship with the creditor, such as in the situation of a doctor or other professional.

What Are The Steps Someone Should Take at The Conclusion Of Their Bankruptcy?

In a chapter 7 case, one of the last steps made by the filer is to complete the post-bankruptcy financial management course. This course is available online and is typically available after hours. If a chapter 7 filer has any non-exempt property, meaning property beyond the limitations that they are allowed to keep within a chapter 7 case, then they will have to make arrangements with the chapter 7 trustees in order to resolve the non-exempt property. In a chapter 13 case, the bankruptcy filer will first have to complete their chapter 13 payments. They will also have to complete the second credit counseling course and financial management course. They may have to file certain documents with the court or with the trustee towards the conclusion of their case.

Final Word on Vehicle Loans After Bankruptcy

Lenders know that a bankruptcy filer doesn’t have any other debts. This makes them a safe bet, so to speak. However, while bankruptcy filers might be able to obtain lending very quickly after bankruptcy, consumers should be cautious about the nature of the loans that they qualify for. The loans that are available to them immediately after a bankruptcy filing may have higher interest rates and more aggressive terms.

For more information on Financing A Car After Bankruptcy, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (727) 538-4188 today.

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