When feeling overwhelmed by financial problems, people in Chicago can turn to bankruptcy as a solution. The good news is that it's possible for consumers who've been through a bankruptcy to qualify for a car loan in the future.
Lost Your Vehicle to Bankruptcy?
Filing for bankruptcy in the Windy City doesn’t mean you have to lose all your property. However, the items you’re allowed to keep depends on what property falls under Illinois state bankruptcy exemptions.
Unlike some states, Illinois requires bankrupts in Chicago to use the state exemption laws, but you may be able to keep more of your personal property by using federal non-bankruptcy exemptions, as well.
Your situation, your vehicle, the amount of equity you have, and the type of bankruptcy you file determines whether or not you can keep your car. Typically, there are two types of bankruptcies filed by individuals in Chicago: Chapter 7 bankruptcy or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is considered a liquidation bankruptcy. In this process, a court-appointed bankruptcy trustee is responsible for the sale of your non-exempt property, with the proceeds going toward the repayment of your unsecured debts. Chapter 7 is a short process that typically takes only three to six months to complete.
Chapter 13 bankruptcy is a reorganization bankruptcy in which your trustee creates a repayment plan that you must complete. A Chapter 13 lasts either three or five years. Because this process allows you time to pay your debts, you typically get to keep all or most of your property.
In both types of bankruptcy, most remaining unsecured debt left unpaid once it’s complete is wiped away. In order to determine if your vehicle qualifies for an exemption in Chicago, you can check with the Illinois state government website, or check out our knowledgeable legal expert partners at Nolo.com.
Getting a Bankruptcy Car Loan in Chicago
If you need a car due to bankruptcy, there are lenders in and around the Chicago that can help. Not all lenders work with people in open bankruptcies, however, so it’s important that you visit the right kind of dealership if you’re looking for a vehicle during an open Chapter 7 or Chapter 13.
If you’re in the middle of a Chapter 7, you're better off waiting until your bankruptcy is discharged. Most lenders don’t take the risk of lending to Chicagoans in these cases, because a Chapter 7 lasts only a few months. Once you’ve successfully completed the process, though, you should have no trouble applying for an auto loan through the right type of lender.
Due to the length of time spent in a Chapter 13 bankruptcy, lenders are a bit more willing to accept applications during this time. In order to qualify for a car loan during your Chapter 13 bankruptcy, you must get your trustee’s permission, while the loan also can’t jeopardize your ability to continue with your repayment plan.
To determine if this is possible, you must get a sample buyer’s order from a dealer that lists the loan details, including the total cost, highest possible interest rate you could qualify for, loan term, and the year, make, model, and mileage of the vehicle you intend to finance. On the paperwork, it’s important that the dealership lists “or similar” by your car selection, because court approval can take time.
If this distinction isn’t listed on your sample buyer’s order and the vehicle you had planned to purchase is gone when you return to the dealer, you have to start the process over. With “or similar” listed, you can continue with the process from this point with a similar model without having to start over.
Even though it’s possible to get approved for an auto loan as a bankrupt in Chicago, it may be even easier after your bankruptcy has been discharged – no matter which type you filed.
Car Loans for Bankrupts
If you find you need a car as a bankrupt person in the Windy City, it’s important to find the right type of lender for your situation, and we want to help. Here at Auto Credit Express, we work with a large network of special finance dealerships all across the nation, including a number of dealers in metro Chicago, that are experts when it comes to handling unique credit situations.
To get connected to a dealership near you, simply fill out our fast and free auto loan request form, and we’ll get to work matching you with a special finance dealer that has bankruptcy lenders available. What are you waiting for? Don’t hesitate any longer to get the bankruptcy car loan you need!