A bankruptcy stays on your credit report for up to seven or ten years, depending on if you filed for Chapter 7 or Chapter 13. However, that doesn’t mean that your credit has to stay down all that time. You can start rebuilding your credit after bankruptcy right away.
Here at Auto Credit Express, we specialize in helping people with bad credit find auto financing. For this reason, we are constantly getting asked about auto loans for people in all types of challenging credit situations. Getting approved for an auto loan in an open bankruptcy is one such of these topics.
Reaffirming a car loan involves committing to a restructured contract. And with reaffirmation, the lender won’t be permitted to repossess the vehicle as long as you’re making payments.
If you enter a Chapter 13 bankruptcy with negative equity in a car that you’ve financed, you may qualify for a loan cramdown if you meet certain requirements.
If a lender sells a repossessed or surrendered car at auction, the selling price may not cover the entire loan balance. If it doesn’t, the amount left over is called a car loan deficiency.
A Chapter 13 bankruptcy involves committing to a repayment plan with your creditors over a three- or a five-year period. That’s a long time, and you may find that you need to finance a vehicle while you are in the middle of the bankruptcy. It’s possible to get approved for an auto loan during a Chapter 13 bankruptcy, but there is a procedure that must be followed.
If you really need to purchase a car before filing for bankruptcy (BK), it might be possible for you to do so. There may even be some advantages that come with buying a vehicle pre-bankruptcy.