Can I Finance a Vehicle During Bankruptcy?
Bankruptcy or not, there are times when you just need a vehicle. That may lead you to wonder whether you can finance a vehicle during the process of a bankruptcy. Bankruptcy can take months to resolve — what should you do in the meantime?
Can You Get an Auto Loan During a Bankruptcy?
It isn't impossible to get an auto loan during bankruptcy, but it is very difficult. First, you should be aware that there are two types of bankruptcy. There is the traditional type of bankruptcy, which dissolves all of your assets (Chapter 7), and another type of bankruptcy, which just restructures your debts (Chapter 13).
During a Chapter 7 bankruptcy, it is difficult, but not impossible, to get a loan. This is because you are often allowed to keep a vehicle of reasonable value during the process of bankruptcy, though you'll still need to reaffirm the loan after the bankruptcy has been completed.
A Chapter 13 bankruptcy makes the process much easier, as you're not liquidating assets, you're just trying to make payment plans for your debts. As long as the vehicle loan is sensible and reasonable, you should still be able to get it.
A greater problem during bankruptcy is the fact that you'll usually have a very limited credit score during the process of bankruptcy.
Tips for Getting an Auto Loan During a Bankruptcy
Consider whether it's the right move for you. Getting a car involves an additional payment, so make sure you can cover the car payment, insurance, maintenance, and repairs.
Get a co-signer. If your credit is currently bad, a co-signer can help. A co-signer with good credit may be able to lower your rates or increase your chances of approval.
Look for the right lenders. Not every lender is open to dealing with someone going through a bankruptcy. Specifically look for lenders who offer guaranteed financing.
Get a reasonable car. If you're declaring bankruptcy, your trustee is going to consider whether you're being responsible with your car purchase. Make sure you can pay for the car that you're getting.
Fill the bankruptcy court in. Make sure your trustee knows what you're intending and engage with the court appropriately regarding documentation; don't try to sneak the loan in.
It's hard but not impossible to get a vehicle when you're going through a bankruptcy. If you need to finance a vehicle today, go to a guaranteed lender, like Chillicothe Truck and Accessories. Contact us today with any questions you may have or to start the financing process.