Whether or not you qualify for auto financing during an open bankruptcy in Seattle usually depends on the type of bankruptcy you file. If you’re in a Chapter 7 bankruptcy, you may find it very difficult, but lenders are typically more willing to work with you during a Chapter 13.
Auto Loans during Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a short process which generally lasts three to six months. During this time, your bankruptcy trustee sells any non-exempt assets, and uses the profits to repay your creditors.
Because lenders don’t want to risk their vehicle being included in the liquidation, it’s difficult to get a car loan during a Chapter 7. If this happens, the lender could end up with a big loss, so loan applications aren’t usually considered during an open Chapter 7 bankruptcy.
Financing in Chapter 13 Bankruptcy
Getting an auto loan during an open Chapter 13 bankruptcy is a bit easier. Chapter 13 bankruptcies last either three or five years, and lenders know that a lot can happen during this time.
When you enter a Chapter 13 bankruptcy, you’re agreeing to repay your creditors a set amount over a given time, so as long as your trustee feels you can afford a car loan and still maintain your bankruptcy payment plan, you shouldn’t have too much trouble getting permission to apply for auto financing.
However, there are a number of steps involved in getting a car loan during an open Chapter 13, and they have to be followed carefully, or you could risk more than just the chance to get the vehicle you need – including having your bankruptcy successfully discharged.
Steps to Getting a Car Loan in a Chapter 13 Bankruptcy
In order to get an auto loan in Seattle during an open chapter 13 bankruptcy, you first need to find a lender that does bankruptcy car financing. These lenders are typically found at special finance dealerships, and you have to visit a dealer to get a sample buyer’s order before the court can give you the final go ahead on financing.
Let’s look at how the steps break down:
- Find bankruptcy auto financing. The financing is typically done by subprime lenders at special finance dealerships. Subprime lenders look at the big picture, not just a credit score. In many cases, they can help people that are struggling with credit issues, including bankruptcy, get financed.
- Get a sample buyer’s order. Work with the finance manager at a special finance dealer, pick out a vehicle, and have them fill out a sample buyer’s order. This paperwork lets your trustee know how much a monthly car loan could cost you, so they can work out whether or not you can afford this on top of your repayment plan. It’s very important that the finance manager includes two things on this form: the highest possible interest rate you could be approved at, and “or similar” next to the make and model vehicle you select. Your trustee needs the worst case loan, and the court approval process can take a long time. Without “or similar,” if the car you picked out has been sold during that time, you have to start the entire process over again.
- Visit your bankruptcy trustee. Once you bring your paperwork to the bankruptcy trustee, they determine if the auto loan is feasible. If so, they file a Motion to Incur Debt with the court. Your creditors are notified that you plan on adding this expense, and are given a chance to object. If none do, and the judge agrees with the trustee, you’re given the go ahead to take out a car loan. You can then return to the dealership and finish the process.
Finding Bankruptcy Auto Financing in Seattle
Now that you know the method you need to go through in order to get an auto loan during an open bankruptcy, it’s time to find a Seattle dealer near you. If you’re stumped on where to go, we want to help.
At Auto Credit Express, we work with special financing dealerships all around the Emerald City and the rest of the nation. We want to get you connected with a local dealer that can help you during your bankruptcy. The process is fast, free, and simple to get started right now.
Fill out our car loan request form, and we’ll get to work matching you to a dealership near you. Don’t wait to get the bankruptcy auto financing you need – get started right now!