Although these two common types of bankruptcies have different processes, they ultimately share the same benefits -- including the ability to get a car loan.

The biggest difference you will find when it comes to Chapter 7 and Chapter 13 bankruptcies and car loans is when you can be approved.

Our team at Auto Credit Express wants to give you a look deeper at what the difference is and why your chances of being approved are good with either type of bankruptcy.

The Fast Track - Chapter 7 Bankruptcy

Easier to Get a Car Loan with Ch.7 or Ch. 13 Bankruptcy?

During a Ch. 7, you'll stand before a judge and explain why you cannot afford to pay your debts. If your reasons are legitimate, the creditors will wipe your slate clean.

However, even though you now have little to no debt and a cleaner credit report, you'll still have a dark spot from the bankruptcy for about 10 years.

This is the quickest form of bankruptcy; taking usually only 3 to 5 months. Because this is the shorter process, auto dealers and lenders will rarely approve an auto loan until after you receive your discharge from the court.

This is because there is a high risk that, if offered auto financing, you could include it in your existing debt. The dealer and lender would be out of that money.

We know you would never do that, but unfortunately there are those that have ruined it for all the others.

Slow and Steady - Chapter 13 Bankruptcy

A Ch. 13 is often a much longer process than a Ch. 7. For this type of bankruptcy you will again meet with a judge and explain your situation.

Instead of wiping away all of your debt though, you'll work with a trustee to set up a payment plan to pay down your existing debt.

This process can take 3 to 5 years. It also could stay on your credit report for about 10 years; however, it is typically removed after 7 years, including the repayment period.

Because the process of a Chapter 13 can last for so long, dealers and lenders are a little more willing to approve you for an auto loan even with bad credit. You would need to have two things though:

  • You'll need documentation of your 341 Meeting and approval to wipe your credit.
  • You'll also need your trustee's approval to incur more debt.

Without these two things, a dealer would not be able or willing to offer auto financing for you.

How We Can Make Your Chances for a Loan Greater

Unfortunately, even when you do have all the appropriate documents and support you need for purchasing a new or used vehicle, some dealers will still not help you with a bankruptcy on your credit history.

At Auto Credit Express, we understand how frustrating that can be. That's why we work with a nationwide network of dealers that can help you with your Chapter 7 and Chapter 13 auto loans.

When you take a few moments to complete our application, we'll find a dealer in your area that not only has a great selection of cars, trucks and SUVs; but also has the resources and experience to help you. Three minutes is all it takes to find the auto loan you need.