One of the most important steps in obtaining an auto loan during open bankruptcy is getting approval to incur new debt. Taking this step ensures that you are obeying bankruptcy laws and will not have your bankruptcy dismissed. Today we'll show you how to get this approval before buying a car.
How Open Bankruptcy Auto Loans Work
Because Chapter 13 bankruptcy payment plans last 3-5 years, many people find themselves needing an open bankruptcy auto loan. Before you consider applying for a car loan while in chapter 13, you need to make sure that you are current on your payment plan. As long as you are current, you can begin to look for financing.
Here at BankruptcyAutoFinancing.com we have a large network of lenders who can work with open bankruptcy clients. By applying online you can find out how much you could borrow. Then one of our loan specialists will contact you to give you the pre-approval information.
The next step is to take this pre-approval to your trustee and explain why buying a car is necessary. Some reasons that you might need to buy a car include:
- Both spouses work, and you only have one car
- You are a stay-at-home parent and need a vehicle to take children to and from school and extracurricular activities
- Your current vehicle is on its last leg and you need to replace it
As long as your trustee agrees that you need to buy a vehicle, they will file a petition with the court. The court will then give you an approval to incur new debt. Your bankruptcy will be amended to show your ability to pay the new amount.
Once you have that step out of the way you can find your new-to-you car. You will be set up with a local car dealer that accepts bankruptcy and has cars that fit your budget. There you will finish the loan process and drive away in a quality pre-owned car.
Rebuilding Your Credit with Bankruptcy Car Financing
Since all of our lenders report your on-time payments to the major credit bureaus, your bankruptcy car financing will also help you rebuild your credit. This will help to lower your interest rates on future loans, lower your car insurance rates and more. You'll be back on the road to financial success in no time!
Remember we are not lawyers and cannot give legal advice. The situations discussed are only our experiences over the years and may vary with each customer.