Consumer Car Buying Advice Blog

Here at Auto Credit Express, we specialize in bad credit car loans. One of the questions we are asked most often is from customers who have experienced a bankruptcy and are wondering if they can finance a car. In fact, a car loan is very possible after a bankruptcy and is a great way to re-establish your credit. There are, however, a couple of questions that need to be answered before you fill out an application.

Was it a Chapter 7 or a Chapter 13 bankruptcy?

These are the two types of personal bankruptcies. A Chapter 7 bankruptcy is fairly short and is usually over in a matter of months. A Chapter 13 bankruptcy can last either 3 or 5 years. If you are currently in a Chapter 7 bankruptcy, you will need to wait until it has been discharged.

If you are currently in a Chapter 13 bankruptcy, you will need to contact the Trustee and have him request an order to incur additional debt from the court. Since your Chapter 13 bankruptcy is based on your income and expenses, you need to get permission from the court before you take on any significant additional debt, such as a car. If the court approves the request, they will furnish you with the document. Make sure you have this document when you apply for a car loan, because you will need this as proof that the court will allow it. The order also states the maximum amount the court will permit you to borrow.

Has the bankruptcy been discharged?

There are actually two ways of finishing a bankruptcy. A bankruptcy can either be dismissed or it can be discharged.

If you bankruptcy has been dismissed – and this is common in Chapter 13 filings than in Chapter 7- it means that the person that filed the bankruptcy has ignored the court order by failing to make the required payments. If you bankruptcy has been dismissed, no sub prime lender will give you a car loan.

If your bankruptcy has been discharged, it means that you have followed all the court’s guidelines and you have successfully finished your bankruptcy. At this time, the court will issue a letter of discharge. Keep this document, since you may need it as proof (the credit bureaus may not have received the information yet, so the lender may require a copy of it). Now it’s time to start rebuilding your credit.

Get a copy of your credit report

Go to www.annualcreditreport.com and request a free copy of your credit report from each of the three credit bureaus. You are entitled to one free copy from each bureau per year. Notify the bureaus through their dispute processes if you find any errors.

Re-establish your credit

There are two types of credit – revolving credit and installment credit. You need to re-establish yourself with both types.

An example of revolving credit would be a credit card. If you don’t qualify for a regular unsecured credit card, apply for a secured credit card, where your credit limit is determined by funds you deposit in a bank account. Look for a company that will switch it over to an unsecured card in 12-18 months, provided you make all your account payments on time. It’s also a good idea if you only use 30% of your credit line.

A car loan is an example of installment credit. At Auto Credit Express, we have helped thousands of people with all types of bad credit get re-established with a new or recent used car. Simply go to our site, www.autocreditexpress.com. Here, you will find the answers to many of your questions, as well as testimonials from our customers. The best news is that you can complete the entire process from the comfort and privacy of your home.

The bottom line

Even if you’ve gone through bankruptcy, you can still qualify for a car loan. So don’t delay. Go to our website at www.autocreditexpress.com and get the process started today. The sooner you get started, the sooner you’ll be “on the road” to credit success!

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