Bankruptcy is a stage to make a fresh start to one’s finances. Often, when starting a new phase after bankruptcy, making a car purchase is a necessity. You can get a car loan while in Bankruptcy or a little moment after filing. Lenders are aware of your condition and will be willing to consider your loan application.
Bankruptcy and Auto Loan
Chapter 7 implies that your non-exempt asset as a debtor is liquidated to offset your debt. It takes between four to six months to complete the process of filing and erasing your debt after which the bankruptcy will be discharged.
In this period, creditors will witness a 341 hearing of your case. There is a possibility of getting vehicle loan during chapter 7 bankruptcy; however, as a lot consumer, you will have a better chance of having your loan approved and most likely with better terms if you apply after the discharge of your bankruptcy.
Car Loan reaffirming under chapter 7 bankruptcy
In case of filing for bankruptcy while with an outstanding auto loan, you may like to keep your car and a usual approach is to reaffirm the loan.
A car loan reaffirming is a legal agreement where the bankruptcy individuals continually pay the debt without having it subjected to discharge via the bankruptcy proceedings.
A car loan reaffirmation gives you the opportunity to retain an interest rate and subject you to pay lower than the available loans after bankruptcy. This is because the effect of bankruptcy is still pronounced in your credit report.
You will be subjected to bearing the consequences when you miss a repayment on a reaffirmed loan after your bankruptcy has been discharged. As a borrower, you will be responsible for any deficit balance and auction fee should a lender repossess and resell the vehicle.
Bankruptcy and Auto Loan
For debtors who have agreed to repay parts or all of their debt with three to five years, chapter 13 auto loan is the most suitable. Chapter 13 Bankruptcy ensures that you still have the possession of your assets which you should have forfeited to the bankruptcy process.
As a loan consumer, haven’t got permission from a court-appointed a trustee, you can apply for a car loan even while chapter 13 bankruptcy is still on. Some lenders are open to considering your loan application.
Proceeding with Auto Loan
If eventually approved for an auto loan, as per the financial trouble you have undergone, you will most likely receive a higher interest and worse financial terms compared to someone with a better credit report. Also, you may be required to pay a reasonable down payment for you to be taken seriously.
Irrespective of your financial situation, you can enjoy the ownership of a car through online lenders as they are willing to partner you in reestablishing a better financial condition for yourself. Find the lenders best situated to your cause and available to handle your case with a great deal of professionalism.