If you are filing bankruptcy, you may be confused about the differences between Chapter 7 and Chapter 13. Which one is better for you? Here we will discuss the differences, and what they mean for you when it comes to bad credit auto loans.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also known as total liquidation bankruptcy. You must be able to prove that you can’t repay your debts on your own, and turn over all property that could be sold to pay off creditors. This type of bankruptcy is usually harder to get, and may result in loss of property, such as your car.
The advantage of Chapter 7 bankruptcy is that you are released from most debts. Most collection actions are stopped, and it only takes a few months to complete. It may be possible to “reaffirm” the loan on your car, in order to keep it. If this isn’t possible, you may need a bad credit auto loan, once your bankruptcy is discharged.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is for people who have a predictable income, such as a steady job. It allows you to repay your debts over a period of 3-5 years. It is easier to get this type of bankruptcy, and you may get to keep property that would otherwise be sold to pay off creditors.
Like in Chapter 7 bankruptcy, most collection actions are stopped. This can allow you to stop foreclosure, and cure late payments over time. You may also be able to keep your vehicle, and pay only the value of it, depending on when you purchased the car. Depending on your situation though, you may need an open bankruptcy car loan.
How Bankruptcy Affects Your Credit
No matter which type of bankruptcy you filed for, your credit will be affected. Both types of bankruptcy will show up on your credit report. They will both make it more difficult to incur further debt, as higher interest rates can be expected when applying for an auto loan.
Here at BankruptcyAutoFinancing.com, we can help you get a bad credit auto loan, regardless of which type of bankruptcy you filed for. Start by filling out our secure online application, and you will be contacted on how we will be able to help you.
Remember we are not lawyers and cannot give legal advice. These are just our experiences over the years and they may vary with each customer.