When times get tough, there's sometimes no choice other than filing bankruptcy. If you're in this situation and need another car, there's no need to worry – there are bankruptcy car dealerships that can help, and we know where to find them.
Bankruptcy and Auto Loans
Bankruptcy doesn't always have to stop you from getting the car loan you need, but you do have to prove to your trustee that you need a vehicle, and that you can afford to pay for it. This can be more difficult in certain types of bankruptcy cases. However, it’s possible in the most common personal bankruptcies: Chapter 7 and Chapter 13.
During a Chapter 7 bankruptcy, you may have a slightly harder time qualifying for an auto loan while your case is open. A Chapter 7 bankruptcy is a relatively short process, generally lasting only four to six months, and many lenders prefer a bankruptcy to be discharged before you apply. This is because, in some cases, lenders risk the car loan being included in the bankruptcy.
A Chapter 13 bankruptcy, though, is a longer process, lasting either three or five years. Because of how long it is, there's a process in place to allow Chapter 13 filers the opportunity to get an auto loan during an open bankruptcy if they need one.
Getting a Car Loan During Bankruptcy
Getting a car loan during a Chapter 13 bankruptcy means finding a bankruptcy car dealership to work with, right from the start. The process can take time, and it requires you to get permission from your bankruptcy trustee and the court, as well as getting a sample buyer's order from a dealer.
A sample buyer's order lists every detail about your potential auto loan: the year, make, and model of the vehicle you've chosen, the total amount of the loan, and maximum monthly payment and interest rate you face. All this information must be listed on the sample buyer's order you give to your trustee, who then presents it to the court for approval.
It's very important that the dealer includes two things on the sample buyer's order: the phrase "or similar" next to your car choice, and the highest possible interest rate you might qualify for. If they don’t do this, and the vehicle is sold or if the lender approves you at a higher interest rate, then you have to start the process over with a new sample buyer's order.
If you're in a Chapter 7 bankruptcy, the process of getting an auto loan depends on similar factors: you have to be approved to take on the debt, and prove that you can afford the loan payments. Because the Chapter 7 process is short, it depends on whether or not the 341 meeting has taken place, you're approved by your trustee and the court for the loan, and you’ve found the right bankruptcy auto lender to help.
Finding a Bankruptcy Auto Dealer
It's possible to get an auto loan in either a Chapter 7 or a Chapter 13 bankruptcy, as long as you're working with the right type of lender. These lenders, called subprime lenders, can be found at bankruptcy car dealerships with special finance departments.
Not all dealers fit the bill when it comes to getting a bankruptcy auto loan, and not all dealerships are teamed up with the right kind of lenders to help. Luckily for you, you have CarsDirect on your side.
We're teamed up with a large network of special finance dealers all across the country. If you're tired of looking for a bankruptcy car loan, let us do the searching for you. Simply fill out our free auto loan request form, and we'll start the process of matching you to a bankruptcy car dealership in your area.
