Many people falsely assume that their car will automatically be taken away when they file bankruptcy, and that they won't be able to get an auto loan after bankruptcy for 7-10 years. Because of this, some people think that transferring the car out of their name before filing bankruptcy will save it from being liquidated. The truth is, not only does this not help you keep the car, but it can also be considered bankruptcy fraud.
Committing bankruptcy fraud has some serious consequences, including a fine of up to $250,000 and/or up to 5 years in prison. Therefore, you should always consult your attorney before doing anything that might affect your bankruptcy. In many cases, you will actually have the option to keep your car, as long as you left it in your name.
The Right Way to Keep Your Car in Bankruptcy
In Chapter 7 bankruptcy, you can keep your car by either reaffirming the loan or you can redeem the loan. When you reaffirm the loan, you pay it back as if you had never filed bankruptcy. If the balance on the loan is more than the car is worth, redeeming the loan allows you to buy it outright from the bank for what it's worth.
Since Chapter 13 bankruptcy is a repayment plan, you are usually allowed to keep your car. You may be able to cram down the loan if you owe more for it than it's worth. However, if you have owned the vehicle for less than 910 days, you will have to pay back the full amount of the loan if you want to keep it.
Auto Loans with Recent Bankruptcy
If you did have to liquidate your car to pay off other debts, it is possible to get auto loans with recent bankruptcy. The key is knowing where to turn to get the best rates possible, and not have to face the humiliation of being turned down. Most traditional lenders will reject your loan application or charge very high interest rates, because they consider you a high risk borrower.
Here at BankruptcyAutoFinancing.com, we believe that everyone deserves a second chance. When you need help getting an auto loan with a bk history, our network of lenders can get you the loan that you need. To get started, simply fill out our online application today, to see how much you could borrow.
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.