Chapter 7 Bankruptcy and Car Financing?
I am currently in the process of filing for chapter 7 bankruptcy. I have not yet had the meeting of the creditors. At the same time I am in desparate need of a new car. I spoke with my attorneys office and they told me to apply for financing before filing for bankruptcy. I have read online that the car could be taken away. I am seeking some guidance on how to go about this. I know that once the bankruptcy is filed my credit score will drop so badly that I probably will not be able to get a car loan, however on the other hand I am also afraid that once I file bankruptcy the bank will take away the new car.
Posted July 18th, 2010 in When To File Bankruptcy. Tagged: attorneys office, car loan, chapter 7 bankruptcy, credit score, creditors, filing for bankruptcy, guidance, new car.
First of all, why are you asking a bunch of complete and total anonymous strangers on the Internet whether or not to follow the advice of your licensed attorney that you are paying to give you legal advice? That doesn’t make any sense.
Your question illustrates perfectly one of the hazards of doing bankruptcy research on the Internet.
There is a HUGE amount of "info" available on the Internet about bankruptcy that is inaccurate, outdated, incomplete, not applicable to your particular situation or your particular State (with its bankruptcy exemptions), biased, misleading, or just plain wrong.
First, you should get your legal advice from your own attorney, not some complete stranger from the Internet who (by the way) may or may not actually be whoever they say they are or have the knowledge or credentials they say they do.
Second, its probably not true that you will be unable to get a vehicle loan after bankruptcy. Most people find that they can receive some kind of secured vehicle loan from somewhere almost immediately following bankruptcy. You may not be able to get terribly good terms and conditions, i.e., you may pay a high interest rate, and you may not be able to get it for exactly the vehicle you most want, but I have never seen a bankruptcy client completely unable to get any kind of a vehicle from anywhere following bankruptcy. There are vehicle lenders who specialize in "bad credit, no credit, divorce, bankruptcy" – heck, around here they advertise quite heavily in fact. You CAN get a vehicle loan from them. It may not be the vehicle of your first choice, but it will be transportation.
Third, virtually the only way you will lose a vehicle in bankruptcy is if you have more equity in it than your state’s exemptions allow OR if you elect to surrender it rather than keep it. I.e., the vehicle you are most likely to lose in bankruptcy is one that is fully paid off. If you have not much equity in it, and a large secured loan on a vehicle, and you reaffirm the loan in bankruptcy, you get to keep the vehicle (and keep making the payments on it).
Many people who "say" that they "lost" a vehicle in bankruptcy actually made a decision to surrender it back to the lender rather than keep making the payments. This can actually make more sense in many cases (for example, if the vehicle is one the client cannot afford going forward). For some reason, when some people tell their bankruptcy stories, they may prefer to make it sound like their vehicle was "taken" from them by the "big bad bank" rather than saying that they made the decision themselves to surrender it. *shrug* This actually rarely happens, particularly with vehicles where you have almost no equity in the vehicle at the time of the bankruptcy.
For more info, ask your own attorney – NOT anonymous strangers on the Internet!!!
July 18th, 2010 at 2:14 am