Every case is different, and several factors determine how long after bankruptcy you can get a car loan. In most cases, where you purchase a car, the bankruptcy Chapter you filed under, and the down payment you can afford matter. These factors together will determine your post-bankruptcy vehicle purchasing power.
You may have to contend with higher-than-normal interest rates and look for car dealers and lenders who will work with you to make a purchase. While you reassess your financial circumstances and get the fresh financial start bankruptcy offers, you may consider purchasing a car outright. A bankruptcy lawyer can help you better understand your options.
Declaring bankruptcy will understandably cause your credit score to drop, perhaps significantly, which may result in “poor” credit. Like most installment loans, the loan you apply for to buy a car is based on your creditworthiness. Your creditworthiness, in turn, is reflected in your credit score. Therefore, a low credit score can make it harder to get a car loan.
Your bankruptcy will also remain on your credit report for up to ten years, according to Forbes. If a bankruptcy lawyer represents you, they can examine your current financial status and explain your vehicle purchasing options. Your lawyer can also help you make additional post-bankruptcy credit and buying decisions.
Options for Getting a Car Loan After Filing for Bankruptcy
Some auto dealerships specialize in making loans to customers who pose a high credit risk. You may qualify for a loan at one of these locations sooner than anywhere else. The interest you pay for a loan could be excessively high, though, so consider this option carefully.
Lenders may also be more willing to work with you if you ask someone with good credit to cosign for your loan. However, this can be a risky choice for the cosigner, since they will be responsible for your debt if you default on the loan.
Consider your choices carefully and review them with your lawyer. They can review the specific details of your bankruptcy and explain how long it takes to rebuild your credit.
Bankruptcy May Make Purchasing a Vehicle Outright More Feasible
One of the primary benefits of bankruptcy is its ability to have your debts discharged or erased. After your bankruptcy filing is approved and the included debts have been discharged, you may have more disposable income than you did during the bankruptcy process.
With more readily available cash, you may be able to afford to purchase a car in full without applying for a car loan. This could be a viable option that gives you time to work on rebuilding your creditworthiness.
If purchasing a car with cash is an option, it can help you meet your ongoing transportation needs while giving you the time you need to rebuild your credit.
For a legal consultation with a lawyer serving North Carolina and South Carolina, call 828.286.3866
You can do a few things after bankruptcy to improve your credit score as quickly as possible. Here are a few tips:
- Pay your bills in full every month.
- Monitor your credit report to check for errors.
- Monitor your credit score to understand what you may be doing to hurt or help your score.
- Aim to build an emergency fund so you can avoid going into debt due to unexpected costs in the future.
- Consider getting a secured credit card, which requires an upfront deposit to protect lenders.
- Ask a relative or close friend to add you to their credit card account, so you can benefit from their good credit history.
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You can file for bankruptcy on your own and represent yourself in court. However, doing so can be risky, since the process can be complex and lengthy. Without legal guidance and support, you would have to:
- Declare and document your total income
- Describe your complete debt load
- List all creditors included in your filing
- Describe all of your current expenses
Managing all of this on your own while simultaneously fending off creditors can be stressful. A lawyer can help you understand your options and the subtleties of the process.
A Bankruptcy Attorney Can Help You Make Sound Decisions
Bankruptcy can give you a fresh financial start if you are overwhelmed by an insurmountable amount of debt. However, it will impact your credit score and the length of time it takes for your credit score to recover.
Declaring bankruptcy requires significant personal and financial awareness. A local bankruptcy law firm will help you make the right choice. They can:
- Explain each bankruptcy Chapter and what it entails
- Clarify the filing process and approximate timeline
- Complete all necessary schedules, forms, and paperwork
- Negotiate with your creditors, where warranted
Bankruptcy has various benefits that your attorney will explain, including the automatic stay, which can relieve the burden and aggravation of debt collection efforts and give you peace of mind. Your lawyer will also help you effectively navigate the process from start to finish.
What Bankruptcy Filing Options Are Available?
As an individual, you can file under multiple Chapters of bankruptcy. Which option you choose will depend on your current financial circumstances and debt load. In most cases, individual filers will choose between:
The option you choose and its timing are crucial. Your lawyer will explain the difference between these types of bankruptcy and guide you toward the best option. They will also handle all paperwork and represent you when you are required to appear in court.
When you are ready to seek bankruptcy protection and start making sound financial decisions later, our bankruptcy law firm is ready to represent you. We will answer your specific questions and address your unique needs.
Get started today by contacting one of our consultation team members at Farmer & Morris Law, PLLC to learn more about how soon after bankruptcy you can get a car loan.