Car Loans after Bankruptcy

After declaring bankruptcy there are several "debtor-friendly" credit repair lenders, mortgage brokers and automobile dealerships throughout Arizona, Nevada, and California. These credit repair lenders may be able to help you get back on your feet after filing a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.  Ask either your Arizona Bankruptcy Attorney or your Nevada Bankruptcy Attorney to assist you in locating these lenders.

Since a Chapter 13 bankruptcy can last for years, while a Chapter 7 lasts for little more than four months, lenders approach both types differently.

In a Chapter 7 bankruptcy, the first step is the means test. It’s this step that determines whether or not you qualify for this type of bankruptcy. If the means test is passed, the next step is what is known as the 341 meeting. This is where the court appointed trustee affirms the value of your assets and the accuracy of the information contained in the schedule of debts.

The 341 meeting in a Chapter 7 bankruptcy is important, because lenders will not consider a loan if this meeting hasn’t taken place. While many lenders want a Chapter 7 to be discharged (due to the short length of time), there are also some lenders who will consider someone in a Chapter 7, provided the 341 meeting has taken place.

A Chapter 13 bankruptcy is entirely different. Just as in a Chapter 7, the court appoints a trustee. Because of the time involved, the duties of a trustee in a Chapter 13 bankruptcy are expanded. In order to apply for a car loan during a Chapter 13, you need to petition the trustee for an order to incur additional debt. This order allows you to take out a new loan while still in bankruptcy. Without this order, you are not allowed to apply for any loans during the bankruptcy.

Since a bankruptcy appears on your credit report, all banks that review your credit file, before they will even consider a loan, will ask for the court order that states you are allowed to take on additional debt. The order will also specify the maximum amount the court will allow you to borrow.