Bankruptcy Car Loans: How Filing Will Affect You

Filing for bankruptcy is never a pleasant option, and bankruptcy car loans can complicate things. Here are a few things you need to know if you are filing bankruptcy now, or have filed in the past, when it comes to your car loan.

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There may be a few ways for you to keep your car even if you are facing having to file for bankruptcy

If you purchased the car within 30 months of filing, you are required under Chapter 13 rules to pay back the entire amount of the loan. So bankruptcy will not wash the loan out of the picture.

In Chapter 7 you must pay the lender the retail replacement amount of the car's value. So there may be a difference between the two figures when you are looking at bankruptcy.

If you don't want to keep the car, you can always surrender the car back to the dealer. However, you may still end up on the hook for any lost value the car has had since you've had it.

Before you file with an existing loan you want to consult either a debt relief agency or a lawyer to understand your options and how much you will end up paying.

A bankruptcy will appear on your credit report for at least ten years, but as long as you've completed the requirements mandated when you filed, and the bankruptcy has been discharged, you may still be able to qualify for a car loan.

Before you start looking, make sure you know what your credit report looks like. The bankruptcy will still show up even after it's been discharged, but you need to know anything else that is there. It's not uncommon for creditors to report accounts open that are actually closed, or for you to find other errors. Before you think of purchasing a car you need to make sure your credit report is accurate.

Be honest with the lenders when you start looking for a car loan. They will find out if you've filed bankruptcy even if you don't tell them. You will save a lot of time by just being upfront, and there are lenders that will still loan you money for a car loan even after bankruptcy. You can expect to pay more in interest since you will be seen as a higher credit risk, and your monthly payments may also be higher since a lot of lenders will only consider shorter terms if you've had a bankruptcy.

Rebuilding your credit after bankruptcy can be a time consuming process, but after you've successfully made payments on your car loan for at least a year you can start to look in to refinance options. This will help to bring your interest rate and your monthly payments down.