Getting a Car Loan While in an Open Bankruptcy
Open Bankruptcy Auto LoansThere are two types of personal bankruptcies: Chapter 7 and Chapter 13. A few years ago it was more common for people with bad credit to file a chapter 7 (total liquidation). With a chapter 7, all your debts are wiped clean and the process takes only a few months.
Since the new bankruptcy laws went into effect, fewer and fewer and fewer people are allowed to file chapter 7. More and more people are now filing chapter 13., which is a repayment plan that lasts between three and five years. Since more people have to file chapter 13, many people are in an open bankruptcy when it comes time to buy a car.
Get Approval from your TrusteeTo get an auto loan in an open chapter 13 bankruptcy, you will have to do some work. There is no such thing as an instant approval or apply today Drive Today Auto Lending if you are in an open chapter 13. First you should check with your trustee or attorney and let them know that you want to buy and finance a car.
Every lender that approves people in open bankruptcies requires an Authorization to Incur Debt. This is a legal document obtained from the bankruptcy trustee. It states what your maximum allowable payment is and that the new loan will not be part of the open bankruptcy.
As long as the new car you plan on purchasing is within your budget, most trustees have no problem approving your request. We recommend that you obtain this document from the courts prior to shopping for your new car.