New Car Loan During Bankruptcy: Filing for bankruptcy is one of the most distressing things an individual can do. For the majority of people who go bankrupt it is simply a case of debts piling up and becoming unmanageable.
But becoming bankrupt needn’t be the end of the world, it’s undoubtedly one of the most stressful periods you can go through, but once it’s sorted out you can plan for the future. For instance you may need to buy a new car and you may need finance to get it, getting a new car loan during bankruptcy isn’t going to be easy, but at the same time, it’s not impossible. This article will offer some advice on how to go about this.
New Car Loan During Bankruptcy: Facts to know!
There are two types of bankruptcy, Chapter 13 and Chapter 7. Chapter 13 is often called the ‘wage earners plan’ and it enables an individual to keep hold of their property and assets. In this case the person may be able to keep hold of their car and so not need a new car loan.
If a Chapter 13 bankrupt wishes to get a car loan they must first get the permission of a Chapter 13 trustee. They will look at your payment plan to make sure everything is up to date, that’s why it’s vital to be as open and honest as you can be with your creditors because they can make life very difficult for you if they wish to.
During a recession like the one which followed the banking crisis of 2008 more and more private individuals have got into financial difficulties and so the banks do understand the situation. However, they will always look more favorably on people who are willing to make regular payments than those who walk away from their debts.
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- Chapter 7 bankruptcy is for those with no income.
If you file for Chapter 7 bankruptcy you will lose all your assets, which will be sold to pay off your debts, you will be discharged from your debts but it maybe very, very difficult to obtain credit in the near future.
But nothing is impossible and if you can show some humility, maybe even remorse and show that you have an income and a way of paying off the loan, it might be possible to obtain a car loan whilst a Chapter 7 bankrupt.
The credit fuelled decade which ended with the banking crisis left individuals and even countries in dire financial straits. It seemed everybody borrowed far more than they could realistically afford to pay off and now many people are paying the price.
The stigma of bankruptcy isn’t quite as potent as it was before, as so many law-abiding individuals have found themselves in financial difficulties, and there is a realization that normal life should carry on for a bankrupt person.
New Car Loan During Bankruptcy: The first thing to do!
If you do need a car loan whilst bankrupt the first thing to do would be to ask family and friends to help. If they can’t then you have to ask yourself if you really need this car? If you do, then you have to do find a car that’s affordable.
Not only that, you have to think about car tax, insurance, garage charges, and petrol, running a car is very expensive and if you have just gone through bankruptcy it’s something you should think about very carefully.
Once you’ve settled on a car you like the next thing to do is to shop around and see if there are any brokers that are actually offering services to people who are bankrupt. The financial services industry is always offering new products and it’s a possibility that there might be one out there for you.
=>> New Car Loan During Bankruptcy: A powerful tip!
- Start with your local garage;
try to get a feeling for what they’re saying to you. You have to sell yourself as someone who is responsible, who has make mistakes in the past, but is now willing to make changes and be responsible in the future. You will need to show that you have an income, that you are paying your creditors on time, and that you are now a good risk.
It could be down to the strength of your personality as to whether you are accepted for credit during bankruptcy. But don’t leave anything to chance, do as much homework as you can.
If you are offered a deal it’s very likely that the interest rate will be very high, you have to work out if you can pay this rate over a long period, or whether it’s just a recipe to get you back into trouble. Try and negotiate the rate down a little if you can, it’s bound to be frustrating when you see other people offered great deals, but that’s just the way it goes once you have become bankrupt.
You should give it a few months, get your finances in order, start a payment plan, maybe even find some extra income from somewhere and then the next step is to try and rebuild your credit file. Find out who holds your credit record, get hold of a copy and try and repair it by writing to them telling them about your situation, how it’s improved and getting rid of any errors that may be on it.
New Car Loan During Bankruptcy: A Powerful tip!
Your chances will be better if you can offer a down payment, cash is always good but if you can offer some collateral like your home then you have to work out whether it’s worth it for you to do that.
Of course if you default in those circumstances you have a good chance of losing your home, so you have to think very carefully before going down this route.
Once you are bankrupt you have to change your lifestyle completely, you have to reassess your finances and find out why you got into so much trouble in the first place.
If you want or need that car, then follow these steps and you have a great chance. Getting a new car loan during bankruptcy won’t be straight forward, but if you change your ways and show your creditors you’re a good risk, it shouldn’t be impossible.