How long do you have to wait to buy a car after Chapter 7? Some people buy vehicles within a few weeks or months of a Chapter 7 bankruptcy discharge. Financing a vehicle is one way to begin rebuilding your credit, and many places will finance those just emerging from bankruptcy. You may even receive emails or postcards offering a loan.
However, you should be aware of interest rates, as these are usually subprime lenders with high interest. You may be better off saving and waiting until you can pay in cash, if possible. You can discuss how long after filing Chapter 7 you can buy a car with your bankruptcy attorney. They can help you determine when it is okay to make a big purchase based on the specific details of your case.
You May Have More Money to Buy a Car After Your Bankruptcy
While most people who file Chapter 7 bankruptcy are able to keep their vehicle and other assets, it may be tempting to buy a new or more reliable car after the bankruptcy is over. In general, there are two ways you can purchase a vehicle: taking out a loan or saving up and paying in cash. This is true no matter your history of debt or bankruptcy.
Once a Chapter 7 bankruptcy is over, you may have the money to make a monthly payment or the ability to save up and pay as much as possible in cash. This could be possible because:
- The bankruptcy discharged your debts.
- You no longer have to make steep credit card payments.
- You no longer have a debt installment plan.
- Creditors can no longer garnish your wages.
Be Cautious About Taking Out Loans Soon After Filing Bankruptcy
While you could take out a car loan and make the payments immediately after your bankruptcy, you are unlikely to get a good deal when it comes to financing. Your credit will take time to bounce back, although maybe not as long as you think. Better options might be:
- Saving up to buy a used vehicle
- Purchasing a vehicle from a family member or friend
- Taking a loan from an individual instead of a finance company
This process may take longer or be a more unconventional route, but it could save you a lot of money over the life of a subprime auto loan.
What if You Need a Car Today? Do You Have to Wait?
It’s best to avoid purchasing a car or other significant asset until your debts discharge and your bankruptcy is final. It can be difficult to live without a vehicle if yours is deemed nonexempt or starts breaking down. However, it may be best to exercise patience and try to find an alternative for a few months.
Filing Chapter 7 bankruptcy generally takes between three and five months total. After you submit your petition, the trustee will review the filing and schedule your meeting of creditors. This is usually around a month after your filing date, but it could be longer. Then, you will wait about 60 days further for the full discharge.
After this occurs, you can buy a car immediately, if necessary.
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Thinking of buying a car before filing Chapter 7?
It is important that you try not to buy a car or otherwise acquire any significant assets in the few months before filing Chapter 7. The bankruptcy trustee will see this on your petition and in your financial records, and it could cause issues.
For example, they may believe your financial situation is not as dire as you report. It could trigger an audit of your case and additional scrutiny. At the very least, you will likely be asked numerous questions about the purchase.
In addition, if the car is worth more than the state’s exemption for motor vehicles allows, the bankruptcy trustee may sell it as a way to cover some of your debts. It is better to wait until after the discharge to make the purchase.
Leaning on Our Chapter 7 Bankruptcy Lawyer to Help You with Big Decisions
If you are considering filing bankruptcy or are in the middle of Chapter 7 but need a car, you may want to speak with an attorney who regularly handles these cases in your area.
While most people filing Chapter 7 bankruptcy retain their assets – and many have no nonexempt assets at all—there are still considerations to make about buying a car before, during, or after your debt discharge. An attorney from our firm can explain what you need to know, answer your questions, and help you plan for your purchase.
Connect with Our Team About Your North or South Carolina Bankruptcy Today
At Farmer & Morris Law, PLLC, we help clients with Chapter 7, Chapter 13, Chapter 11 reorganization, and Chapter 12 bankruptcy for family farmers. We have several offices to serve clients throughout North Carolina and South Carolina, including our main office in Rutherfordton, NC.