How Can I Get a Car after Bankruptcy
by Mashum Mollah Loans & Credit 03 August 2018
Being granted bankruptcy after really difficult financial problems may appear like a salvation; and it is, to a certain degree.
As bankruptcy experts at Chang & Diamond, APC is careful to say, bankruptcy offers a relief from immediate financial problems, but it has some caveats.
Your credit score is going to take a hit, and that may restrict or limit some options in the near future. One of those things is buying a car.
However, even though it might be more difficult, getting a vehicle soon after your bankruptcy is not impossible. Here’s how you can do it.
Manage Your Expectations :
In a vast majority of cases, people need cars to live their everyday lives, everything from going to work and back, to shopping and going out relies heavily on cars, the American cities are just built that way.
That is why it is paramount that you get a vehicle as soon as possible. However, getting a loan for a new car may prove difficult since your credit score is pretty low this close to bankruptcy. The interest rates you will probably be offered will be significantly higher than you had previously.
A really good option is looking at pre-owned cars. These vehicles are typically a lot less expensive, which can reduce the amount of time you will be paying it off. What’s more, it’s far less likely that your new car payment will interfere with any debt payments you may still be obligated to make.
Look into Reaffirming Your Previous Car’s Loan
If your car was one of the things which were counted as a non-exempt asset and taken away, you might be able to reach an agreement with your creditors to keep the car and continue payments for the said car instead of giving it away for a debt write-off, and then going out to buy another car.
This process is called reaffirming the loan and it will require you to sign a new contract with your creditor with updated information about the car and the state of your debt.
Keep in mind that this option is only available if you file for Chapter 7 bankruptcy. To learn more about this type of bankruptcy consult this article https://www.thebklawyers.com/san-diego-chapter-7-bankruptcy-lawyers/.
However, be careful with reaffirming debts. If you do this and start missing payments to the creditor, you risk having your car repossessed and you can be sued by the creditor for the remaining amount of money.
Recover Your Credit Score :
Some bankruptcy experts recommend putting off buying a new car for a short while. Even though the steady payments on your car loan help recover your credit score, the same effect can be achieved by getting a credit card and making small purchases which you repay in time.
However, if you need to have a car, a car loan is your best option, both to have a car and to start rebuilding your credit score. Just be sure to make regular payments.
Even though you may not be able to get the car you want right away if you are willing to compromise and work your way towards recovery, eventually you can return to normal life without too many problems.
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