Buying a Car after Bankruptcy
To learn more about the effects of filing bankruptcy, speak with a bankruptcy attorney. If you're still considering filing bankruptcy, an attorney can explain the factors that can help you rebuild credit after you file.
Connecting with an attorney in your area is easy. Simply fill out our free case review form below to arrange a no-obligation consultation with a bankruptcy lawyer in your area.
Bankruptcy, Credit and Cars
To understand the relationship between bankruptcy and getting car loans, it's important to know about bankruptcy and your credit.
- Your credit history: This is a collection of information about your relationship with credit throughout your adult life. It includes payment history, types of accounts you have, how much total debt you have and how much credit you have available. The information in your credit history is used to determine your credit score.
- Your credit score: This is a number between 300 and 850 that many lenders use to determine your "credit worthiness." In other words, the higher your credit score, the better loan terms you’ll qualify for.
- Bankruptcy and credit: When you file for bankruptcy, that information appears on your credit report. Perhaps unsurprisingly, bankruptcy is considered a negative action, largely because it shows that you were unable to pay some or all of your debts. And, while the fact that you filed for bankruptcy stays on your credit report for seven to 10 years, the overall impact of that information decreases as time passes.
- Rebuilding credit: Once you've filed for bankruptcy, part of your recovery should be to rebuild your credit so that when you apply for loans in your post-bankruptcy life, you won't be stuck with sky-high interest rates and other unattractive terms.
Qualifying for a Car Loan after Bankruptcy
In order to qualify for an auto loan after filing for bankruptcy, it's important to rebuild your credit, because that’s what lenders look at to determine whether or not to offer you loans.
- Stay current on payments: One important factor in your credit score is paying bills in a timely manner. Keeping current with payments in a Chapter 13 repayment plan, keeping up with your rent or mortgage and paying all other bills by their due dates should help boost your score.
- Show how you've improved: A year or so after you've filed your case, you may want to start rebuilding your credit by opening a new credit card, making small charges on it and paying your bill in full each month. This is one way to show responsibility and credit worthiness. Of course, it's important not to fall back into any pre-bankruptcy patterns that might lead you to unmanageable debt again.
- Be patient: The only way to really improve your credit is to do it slowly, over time. It may be hard to wait for all your good post-bankruptcy behavior to pay off, but when it does, it should be worth all your hard work.
Learn More about Car Loans after Bankruptcy
For more information specific to your situation, consider speaking with a bankruptcy lawyer practicing in your area.
Connect with an attorney today. Simply fill out the free case review form below to arrange a free, no-obligation bankruptcy consultation with a local attorney.