If you're in an open Chapter 7 bankruptcy and are wondering if you can get a car now, the answer is usually no. You typically need to wait until your Chapter 7 bankruptcy is discharged if you want to finance a vehicle. Subprime lenders that work with credit-challenged consumers probably aren’t going to approve someone in an open Chapter 7 bankruptcy since they know the process only lasts a few months.
Chapter 7 Bankruptcy Basics
A Chapter 7 bankruptcy is considered a liquidation bankruptcy and generally lasts around three to six months. If your assets fall under your state’s exemption limit, you get to keep them; if not, they’re usually liquidated. Liquidation means any non-exempt property – which could include a house or car – can be sold to pay back your creditors.
You're required to attend a meeting with your creditors 30 days after filing a Chapter 7 bankruptcy, which is known as a 341 meeting. Nolo.com, a legal website with expertise in this area, says that the court sends you a written discharge of your debts about 60 to 75 days after the 341 meeting. Once your Chapter 7 bankruptcy is complete, your debts that qualify are discharged and you start fresh.
One thing to keep in mind: you have to wait eight years from the date you filed if you want to file another Chapter 7 bankruptcy. It’s also important that you stay on top of your monthly bills once your bankruptcy is complete. If you think you might have any issues, reach out to your creditors before it’s too late.
What if My Chapter 7 Bankruptcy Was Dismissed?
You’ve heard of Chapter 7 bankruptcies being discharged, but what about being dismissed? It’s important to understand that these two terms are not the same thing.
A discharged bankruptcy means it was completed successfully, while a dismissed bankruptcy means it wasn’t completed. Dismissed bankruptcies aren’t viewed in a positive way by auto lenders, and it makes it much harder to get approved for financing in the future.
According to Nolo, the court could dismiss your case because you failed to file the correct forms, abide by deadlines, file a course completion certificate for credit counseling or debt management, or attend a mandatory hearing, such as the 341 creditor’s meeting.
Depending on why your Chapter 7 bankruptcy was dismissed, at worst, it could be dismissed with prejudice which, in this case, means it’s possible that the court could forever prevent you from discharging any debts that were dischargeable in the dismissed case.
The court could also extend the amount of time you have to wait to refile, which is referred to as a 180-day bar. A 180-day bar can be put in place if you fail to follow the court’s orders, voluntarily request a dismissal after the filing of a motion for relief from the automatic stay, commit bankruptcy fraud, or file multiple cases in bad faith to delay creditors.
If you’re unsure about the process, or wonder if something you want to do would violate the court’s orders, reach out to your trustee. It’s better to be safe than sorry, so ask questions before taking action.
Get a Post-Bankruptcy Auto Loan Today
You typically can’t get a car loan with an open Chapter 7 bankruptcy. However, you don’t need to wait too long before you can finance a vehicle. Plus, you don’t have to go far to find the auto loan you’re looking for – we can help you out.
At Auto Credit Express, we work with dealerships across the country that specialize in helping borrowers in unique credit situations, including bankruptcy, get financed for the vehicles they need.
We’ve been matching consumers to dealers near them that can help for over 20 years. You can be next if you start the process by submitting our easy and secure car loan request form.