- June 15, 2023
- Thomas Adam
Your ease in obtaining a car loan after bankruptcy can depend upon whether you filed for Chapter 7 or 13 bankruptcy.
It can be more difficult to find a lender, and the interest rate might be higher. Below, we discuss some of the ramifications of purchasing a vehicle under Chapter 13 bankruptcy:
Chapter 13 Bankruptcy and Credit
Chapter 13 bankruptcy – also known as repayment bankruptcy – allows you to keep all of your assets while repaying your debts and creditors over a period of three to five years. This can remain on your credit report for up to seven years (starting when the case is completed).
When you apply for a car loan, lenders can rely on your credit report to determine the risks associated with providing you with that loan. How long ago you filed for bankruptcy can affect your ability to obtain a car loan (for example, if it was only several months ago, it might be more difficult to obtain that loan). You may also face a higher interest rate and/or origination fee in applying for the loan if you have declared bankruptcy.
The Role of Your Attorney in Securing Your Future
Working with the right attorney during the bankruptcy process can help increase your chances of protecting your credit and therefore being approved for a car loan, for example. For example, your attorney can help you check your bankruptcy reporting in order to ensure that any debts that appear there are reported as closed accounts with a zero balance. Your attorney can also help you ensure that your credit report does not contain any errors that could negatively affect your ability to obtain a loan (in addition to errors related to debts).
However, it is important to note that it can be more difficult to apply for a car loan while you are in the middle of the bankruptcy process. Also note that any debts incurred related to a purchase such as this cannot be added as new debt to the existing bankruptcy case.
If you possess the funds to purchase a vehicle while you are going through Chapter 13 bankruptcy, while you do not technically have to go through the court, you may need to amend your bankruptcy schedule first. Therefore, it is important to work with your attorney on this.
Jacksonville, Florida Bankruptcy Attorneys on Your Side
Struggling with debt can be exhausting and stressful. Regardless of how hard you work, it can be beyond difficult to catch up, and circumstances can lead to what feels like a disaster.
At Adam Law Group, we are committed to helping you get through this process. Contact us today for a free consultation to find out more.