Unfortunately, there is a significant stigma surrounding bankruptcy that makes many feel shame or guilt for filing. It’s important to understand the majority of Americans carry debt, so taking matters into your own hands to seek relief is not something you should feel bad about. If you have filed for bankruptcy, understanding the impact it can have on your finances and ability to secure a car loan is critical. The following blog explores what you should know about these matters before you begin test-driving vehicles. Additionally, you’ll discover why working with a Shelby County, TN bankruptcy lawyer is important to ensure you go through this process as seamlessly as possible.
How Does Bankruptcy Impact My Finances?
When you file for bankruptcy, it’s critical to understand the impact this decision can have on your finances. When you file for bankruptcy, it will appear on your credit score for seven years if you file Chapter 13 and ten years if you file Chapter 7. Having a bankruptcy on your record can make it harder to secure loans, as lenders are hesitant to extend loans to those who are at risk for filing again. As such, it can be incredibly challenging to find a car loan after you’ve filed for bankruptcy.
However, it’s also important to understand that despite the impact it can have on your finances, filing for bankruptcy can provide much-needed financial relief for many. Not only can this help eliminate debt, but it allows you to regain control of your finances.
Is There Anything I Can Do to Get a Car Loan After Filing?
If you are going to try to purchase a vehicle following bankruptcy, understanding the timeline as to when you should begin this process is critical. Generally, if you’re filing Chapter 7, you’ll want to wait before applying for a car loan. If you apply before your case is finalized, it can be viewed as fraud, which can result in your case being dismissed before your assets are discharged. If you file Chapter 13, this can take three to five years to complete. As such, you may be able to purchase a vehicle to finance if the court permits it.
It’s necessary to understand that though it can be challenging, it’s not impossible to secure a car loan after filing for bankruptcy. As such, understanding what issues you may face and what your options are is critical.
Generally, one of the most pressing matters you’ll encounter is that lenders will deny you because of your credit history. Even if you are approved, you may find that the interest rate is incredibly high. This is because the lender wishes to protect themselves in the event you should fall behind on payments.
One way you may be able to circumvent these matters is to opt for a lower-cost car, build your credit history back up through credit-builder loans or secured credit cards, or have a friend or family member co-sign the loan.
Though it can be challenging to obtain a car loan after bankruptcy, it’s not impossible. If you’re in debt, the best thing you can do is discuss your legal options with our team at the Arnold Law Firm. We can help you determine if bankruptcy is right for you, and if it is, we will guide you through this process. Our team will do everything in our power to make this process as simple as possible so you can regain control of your finances. Contact us today to learn more.
