Every year, hundreds of thousands of consumers make the hard choice of filing for bankruptcy. Although bankruptcy is a great way to erase your debts, you will still need a form of transportation to get to work. If you are in the middle of filing for bankruptcy, you can, in fact, get an auto loan.
The process of filing for bankruptcy can be long, especially if you are going through Chapter 13 bankruptcy. If you are in the process of filing for Chapter 7 or Chapter 13 bankruptcy, you’ll need to follow the steps below in order to buy a car:
Find a Qualified Lender
This may sound easy at first, but this is the difficult step for most people. We recommend first talking to your own trusted bank or credit union and checking to see if they can approve you. If they deny your loan, you will need to begin working with a subprime dealership or a subprime lender.
Many dealerships, however, have their own financing departments and can get you approved regardless of credit. It’s important to note however many of these dealers charge aggressive interest rates and can repossess your car if your payment is only a few days late.
If you have found a dealer that can work with you, you can start searching for a car.
Talk to Your Trustee
During the bankruptcy process, you will have a court-appointed trustee placed on your case. If you have been approved for a car loan, take the proper documentation to your trustee. You and your trustee will sit down and fill out a document that explains why you need this car.
Be sure to choose a regular everyday type of car. There is almost a 0% chance that a trustee will allow you to buy a luxury car while filing for bankruptcy.
Once you submitted the proper documentation with your trustee, you’ll need to wait to hear back from the courts. Your trustee will file a document called “a Motion to Incur Additional Debt”. The creditors in your case will receive a notification of this and are allowed to provide an opinion.
If multiple creditors have questions, you might have to attend a hearing. If the court ends up approving your motion, you can take the paperwork to your dealer and finish up the process.
If you are looking to buy a new car but are in need of financing, CrediReady can help. Our nationwide network of trusted dealers and verified lenders work with buyers in all credit situations. Take a moment to fill out our free no-obligation loan inquiry form and start shopping for your dream car today!