If you’re going through a Chapter 7 or Chapter 13 bankruptcy right now, you may be wondering how you can get auto financing when your bankruptcy ends. However, if your bankruptcy is dismissed rather than discharged, you may have trouble finding a lender that can work with you. Although we’re not lawyers and can’t give legal advice, we can explain how to go about financing a car after a dismissed bankruptcy.
Dismissed Bankruptcy vs. Discharged Bankruptcy
The first thing you need to know is the difference between a dismissed bankruptcy and a discharged bankruptcy. These two may sound the same, but are very different. A discharged bankruptcy means you successfully completed the process. A dismissed bankruptcy, on the other hand, means you didn’t complete the process.
A bankruptcy case can be dismissed with or without prejudice, according to legal experts at Nolo.com. If your bankruptcy is dismissed with prejudice, it could mean you committed bankruptcy fraud, abused the bankruptcy process, willfully disobeyed the court’s orders, or filed numerous bankruptcy cases to delay paying back your creditors – to name a few. Additional legal action could be taken if your bankruptcy is dismissed with prejudice.
If the bankruptcy’s been dismissed without prejudice, it usually means you haven’t filed the correct forms or accidentally made a mistake during the filing process. With this type of dismissal, you can refile immediately and correct the mistake that caused the dismissal.
Getting a Car Loan After a Bankruptcy Dismissal
Just where can you get auto financing with a dismissed bankruptcy? You could try and reach out to a special finance dealer that's signed up with subprime lenders, but because they look at your credit reports, they’re going to see that the bankruptcy’s been dismissed. This isn’t ideal, and you most likely are going to be turned down, since nearly all subprime lenders aren’t going to approve somebody to finance a car with a dismissed bankruptcy.
If you’re stuck with a dismissed bankruptcy, your best bet is to visit a buy here pay here (BHPH), or tote the note, car lot. BHPH dealerships are also the lenders, and work in-house. You have a much better chance of auto loan approval with one of these dealers because they don’t typically run credit checks. So, it doesn’t matter to them if you have a dismissed bankruptcy.
As long as you meet the BHPH dealership’s income and down payment requirements, you shouldn’t have any issues getting approved. However, you need to be aware that one of these loans may not allow you to improve your credit score. If the dealer doesn’t run credit checks, it may also mean they don’t report loans or on-time payments to the credit bureaus, either.
However, in this day and age, more and more of these dealerships are reporting to the credit bureaus. Make sure you ask the dealer about their policies beforehand if you're interested in building your credit.
Need a Dealership to Work With?
No matter if you’re in the middle of a bankruptcy or your bankruptcy’s been recently discharged, Auto Credit Express wants to help you find financing. We're partnered with dealerships all across the country that specialize in helping people dealing with bad credit, no credit, and even bankruptcy.
We'll work to match you with a dealer in your area after you fill out our free auto loan request form. Get started today!