Get a Bankruptcy Auto Loan Today!

Start driving today with a bankruptcy auto loan you can afford!

Auto Financing After or During Bankruptcy

Going through a bankruptcy can give you a financial fresh start, but it lowers your credit scores. Once finished, you may think it might be next to impossible to get approved for credit again, but that's typically not the case. At Auto Credit Express, we specialize in helping people get connected to local dealerships that know how to work through unique credit situations.

Many of our network dealers have options for all types of bad credit situations, including bankruptcy car loans. You can get back on the road and on the way to rebuilding your credit with the second chance you need.

total bankruptcies 356,481
people we've helped 2,189

Getting a Car Loan after Bankruptcy

It can be difficult to build your credit back up following a setback like this, but getting a car loan after bankruptcy is possible. A bankruptcy car loan is a good way to help your credit recover once you've received a discharge from a Chapter 7 or Chapter 13. The process of getting a car loan following a discharged bankruptcy is fairly simple.

Like with any other bad credit auto financing, you need to meet the lender's requirements to qualify. Besides meeting the income, employment, and residency requirements most lenders look for, there are a few tips to keep in mind:

  • Check your credit - Make sure you check that the discharge shows up on your credit reports, check for overall accuracy, and view your credit score to see where you stand before visiting a dealership.
  • Amount matters - The less money you borrow, the easier it should be for you to get approved. A good way to keep costs low is to finance a used vehicle. Keep in mind that you'll need a reliable vehicle, not just an affordable one.
  • Prepare a down payment - The bigger your down payment, the less you have to borrow. Subprime lenders typically ask for $1,000 down or 10 percent of the vehicle's selling price, whichever is less.
  • Cosigners can be a big help - In fact, lenders sometimes require bad credit borrowers to have one. But, before you ask a friend or family member to put their credit on the line, be sure you both know what this means.
  • To be sure you don't get turned away, make sure you have your discharge paperwork with you when you visit a dealership, or it could be no deal if it hasn't been reported to the credit bureaus yet. Another way to strike out with a car loan after bankruptcy is by trying to apply following a dismissal. If you didn't complete your bankruptcy, getting approved for a car loan typically has to wait until your credit has recovered by other means or the dismissal drops off your reports, which could take up to seven years.

    If you're in an open bankruptcy and need an auto loan, it's possible to get one, but the process is very different from getting a car loan after discharge. Depending on whether you're in a Chapter 7 or a Chapter 13, you'll have to follow a different set of rules.

Filing for Personal Bankruptcy?

Struggling with debt? Learn more about filing for bankruptcy protection and find out if you qualify for a free case evaluation.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy is considered a liquidation bankruptcy. This means your nonexempt personal assets can be taken and sold in order to pay off your debts and provide a fresh start. A Chapter 7 bankruptcy is relatively quick, and typically lasts only three to six months before it's discharged, but the bankruptcy filing stays on your credit reports for up to 10 years.

Getting an Auto Loan with an Open Chapter 7 Bankruptcy

Getting an auto loan with an open Chapter 7 bankruptcy isn't impossible, but it is rare. You can apply for a car loan once the 341 meeting with your creditors has taken place, but the chances of approval won't be high. Because lenders know an open Chapter 7 bankruptcy lasts a relatively short amount of time, they'll advise that you wait until it's discharged.

Getting a Car Loan after Chapter 7 Discharge

So, when is the best time to finance a car when dealing with a Chapter 7 bankruptcy? That would be once it has been discharged. This is because lenders wants to make sure the car loan won't be included in the bankruptcy. It's good to wait anyway, because adding more debt may put you in a financial bind. So, before you head to the dealership to apply for a subprime auto loan, make sure you have the official discharge papers.

Simple to Use, Easy to Get Started

Let Auto Credit Express help today.

Chapter 13 Bankruptcy

If you file for Chapter 13 bankruptcy, you set up a repayment plan of either three or five years in which you pay back all or part of your debts. This happens under the court's protection, so you pay a fixed monthly amount to your bankruptcy trustee, which is then distributed to your creditors. The biggest advantage of this type of bankruptcy is that you have the opportunity to retain your property and assets. A Chapter 13 bankruptcy filing stays on your credit reports for up to seven years, but there are auto loan options to explore during and after it.

Getting an Auto Loan with an Open Chapter 13 Bankruptcy

Unlike a Chapter 7, lenders are typically more open to Chapter 13 bankruptcy auto loans. It's not uncommon to need a vehicle before the three or five-year repayment plan is up, which is why there's a process in place for you to follow. Here are the steps to getting a car loan during an open Chapter 13 bankruptcy:

When it comes to special financing, a down payment can play a big role in a car loan approval or denial. Aside from buy here pay here lots, bad credit scores raise a red flag to lenders and dealerships that you are at a higher risk of defaulting on the loan, resulting in a loss of profit for the dealer. Therefore, putting money towards the vehicle up front shows the lender that you are committed to the loan and vehicle. Down payments also help you lower the total finance amount and monthly payment on the vehicle, helping you save money over time.

  • Get a sample buyer's order - The first step is finding a dealership with lenders that are capable of working with an open Chapter 13 bankruptcy. You need to get a sample buyer's order from one of these special finance car dealers. This lists the details of your potential car loan - year, make, and model of the vehicle, loan amount, interest rate, etc. - for the court to review. Make sure the dealership lists "or similar" next to your car choice and includes the highest possible interest rate you might receive. If the vehicle is no longer there or you only qualify for a higher rate than what's listed, the court can render your motion invalid, and you'll have to start the process over.
  • Take it to your trustee - Next, you can take your sample buyer's order to your bankruptcy trustee and explain the reasons you need a car. They'll weigh the loan's potential impact on your repayment plan and determine if it's acceptable or not.
  • The Motion to Incur Additional Debt - Your bankruptcy trustee then files a Motion to Incur Additional Debt with the court. The motion is sent to the creditors involved in your repayment plan. They're given the chance to object, and there'll be a hearing that you may need to attend.
  • The Order to Incur Additional Debt - The bankruptcy court makes a decision, giving you an Order to Incur Additional Debt if they approve the motion. The court can also make specific requests related to your car loan, such as setting the maximum amount for the loan, monthly payment, and interest rate.
  • Finish up at the dealership - Finally, you can take the court order back to the dealership. All that's left to do is finalize the terms of your loan with the dealership's finance department.

Getting a Car Loan after Chapter 13 Discharge

The Chapter 13 bankruptcy auto financing process is more streamlined with your discharge papers in hand. All you have to do is apply with a dealership that's able to help car buyers after bankruptcy. They'll send your application to a lender (or lenders) for a loan decision. Similar to bad credit car loans, these lenders set the acceptable terms of your loan, and you'll be able to choose from vehicles in the dealership's inventory that you qualify for.


If you're going through or have filed for bankruptcy Auto Credit Express can help.

Car Loan Options During Bankruptcy

If you have a car loan when heading into a bankruptcy, you have a decision to make. You can either include the car loan in the bankruptcy and surrender your vehicle, or try to keep it using a few different methods. Surrendering your vehicle means giving up your rights to the car, but you're no longer responsible for the loan balance after discharge. If you're not ready to give up your vehicle, you can try to redeem, reaffirm, or cramdown the loan.


When you redeem a car loan, you have to pay off the current value of your vehicle in one lump sum. While the lender has to agree to this, redemption works out well for people who owe more on their loan than the car is worth, but it can be difficult to come up with the money to cover your car's fair market value all at once.


Reaffirming means agreeing to continue paying the existing car loan as if the bankruptcy wasn't occurring. The loan can be restructured beforehand, so see if there's an opportunity to get better terms. With a reaffirmation, you get to keep the car without the lender being able to repossess it - as long as you're making payments. A lender has to agree to a reaffirmation, and they may not make the option available if you're behind on your loan.


A loan cramdown is another option for filers of Chapter 13 bankruptcy, and it works similar to redemption. It allows you to reduce your loan balance to the fair market value of your vehicle if you have negative equity. You need to have purchased the car at least 910 days (2.5 years) before filing for bankruptcy in order to be eligible for a cramdown.

Filing for bankruptcy and deciding what to do with your car loan are serious decisions. We urge you to seek advice from legal counsel and to carefully weigh any options beforehand.

BBB Rating
as of 07/22/2024

Best Car Dealers for Bankruptcies

With a car loan, you can begin to rebuild your credit scores, which may be low after going through the process of bankruptcy. Your credit can improve if you make your loan payments in full and on time. Because your discharge should have wiped away any remaining debts, completing an auto loan goes a long way toward restoring your credit and building a strong payment history.

When you need a car loan after bankruptcy, the key is to go to the right dealer with the right lenders. Not every dealership works with lenders that are equipped to handle challenging credit situations. And those that do don't always shout from the rooftops that they work with applicants with bad credit.

So, how does someone know where to turn? That's simple: some of the best car dealers for bankruptcies work with Auto Credit Express. In fact, our process is one of the most hassle-free ways to get an auto loan after a bankruptcy.

We specialize in connecting people in bad credit situations, such as bankruptcy, to dealerships all around the country that have the lenders needed to get them financed. The process is simple and obligation free. Fill out our auto loan request form to get started today.

Bankruptcy Articles