Finding the Best Car Dealers for Bankruptcies

Get Car Financing
Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - May 22, 2019

There’s never a convenient time to need a new car, but if you're in the middle of a bankruptcy, the timing couldn't seem worse. While it's true that getting an auto loan isn't easy during a bankruptcy, it's still possible if you're working with the right dealership. But where do you find the best car dealers for bankruptcies?

Locating the Right Lenders

You won't be able to get car financing just anywhere during a bankruptcy. Typically, there are only two types of dealerships that are able to work with someone during a bankruptcy: special finance dealers and in-house financing dealerships.

Special finance dealerships have subprime lenders that are well equipped to work with people in bankruptcy. These lenders look beyond your credit score to other factors such as residence stability, income, and employment.

In order to qualify for an auto loan during bankruptcy, you need permission from the court to take on new debt. Subprime lenders work exclusively through special finance dealers – you can’t find them without going to the right place. Because they're indirect lenders, you can't apply with them face to face.

In-house financing dealerships, such as buy here pay here (BHPH) lots, are both the dealers and the lenders, which means they're a one-stop shop for your car needs. When you choose to go this route and have an open bankruptcy, you're still going to need court approval.

With both of these lenders, you need to get a sample buyer's order filled out which lists the specific vehicle you're planning to buy, a designation for "or similar" to go along with it, and the highest interest rate you might qualify for.

Once you bring this paperwork to your bankruptcy trustee, they can determine whether or not getting a car is viable for you at this stage in your bankruptcy. If you're given the OK, the trustee files paperwork with the court called a "motion to incur debt."

Get an approval on the motion, and you can return to the dealership to complete the process. But, approval isn't as simple as that – it comes down to the type of bankruptcy you're in.

Bankruptcy Types

There are two types of personal bankruptcy you can file: Chapter 7 or Chapter 13. No matter which type you're in, getting an auto loan is easier once your bankruptcy is discharged. However, because most people need a vehicle in their daily lives, you sometimes can't wait it out.

It's more difficult to get a car loan during an open Chapter 7 bankruptcy. The process is short, generally lasting only four to six months, and all your non-exempt assets are liquidated (sold) to help pay back your creditors. In some cases, a vehicle financed during Chapter 7 runs the risk of being one of those assets.

Chapter 13, on the other hand, is a much longer process designed to help you pay off debts through a three- or five-year repayment plan. Because a lot can happen during this time, lenders and the courts have a plan in place to assist you in getting the car you need during a Chapter 13 bankruptcy – as long as it doesn't interfere with your current repayment plan.

Where to Look for the Right Dealer

It can be difficult to get a bankruptcy auto loan if you don't know who to turn to. Rather than searching all over your city for the right dealer with the right lending partners, start here instead.

CarsDirect works with a nationwide network of special finance dealerships that are ready to help you! No matter if you have no credit, bad credit, or bankruptcy, there's a dealer out there for you. Simply fill out our easy and free online car loan request form, and we'll get to work for you.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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