Thursday, February 24, 2011

Auto Financing After a Bankruptcy

Car Dealer FinancingThe new bankruptcy law enacted on October 17, 2005 has made it harder people with bad credit to file bankruptcy. Additionally, many people with bad credit and higher incomes can no longer file for total liquidation through a Chapter 7 bankruptcy, but are forced instead to file a Chapter 13 bankruptcy and repay some of their debt.

The new law however, has had little effect on the ability for people to get a car loan after bankruptcy. Why is it easier to qualify for car loans after bankruptcy when compared to someone with bad credit that hasn't filed for debt relief under the bankruptcy law?

The fact is that most people are considered a low credit risk after the file bankruptcy. Since most or all of the person's debt has been wiped out, people have more disposable income after bankruptcy. Furthermore, most people with bad credit genuinely want to rebuild their credit rating with a car loan after bankruptcy.

The rules are different for people who have filed chapter 7 bankruptcies and people that have filed chapter 13 bankruptcies. Chapter 7 bankruptcies are a total liquidation of your debt whereas chapter 13 bankruptcies require the debtor to repay some of the debt, usually over a three to five year period.

That being said, car loan interest rates are usually lower for people who have completed chapter 13 bankruptcies, but in either case getting car financing after bankruptcy is quite common.


  1. This comment has been removed by the author.

  2. People who have filed for bankruptcy should lie low for six months to one year before applying for loans such as those for car financing. By then, you will have recovered your income and have amassed enough funds to tend to your basic needs.

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  3. It is never easy to rebuild your credit. And after bankruptcy car loan provides us a good option to create things from start.
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  4. A lot of people avoid applying for a bankruptcy loan while also having another cash loan to accumulating a bigger debt. But it's also a way to save money on discounts, and that is a big deal when you think about the financial problems that Americans have had to face and the changes in lifestyle that they have had to endure.

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