Even if your bankruptcy case was finalized a year ago or longer, you may still be suffering from its aftermath. That is, bankruptcy is notorious for hindering your ability to apply and get approved for loans, including car loans. Evidently, owning a car may be essential to your day-to-day life; whether it be to run personal errands or commute to your workplace, among other activities. So, with all things considered, please read on to discover whether bankruptcy can affect your approval for a car loan and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C. can help improve your chances.
Can bankruptcy affect my ability to get approved for a car loan?
In short, yes, having a history as a debtor in a bankruptcy case may affect your ability to get a car loan in the future. This is because your bankruptcy case inevitably lowers your credit score (i.e., lessens it by up to 200 points) and appears on your credit history for the many years to follow. Specifically, your Chapter 7 bankruptcy case will appear on your report for 10 years, while your Chapter 13 bankruptcy case will appear for seven years. Ultimately, car lenders may conclude that approving you for a loan would be a risky choice they would rather forgo.
However, it is not completely impossible to make this happen. You just need to be aware of the harsh restrictions you may be under. For example, you may face higher interest rates imposed by lenders willing to offer you a car loan. Or, these lenders may expect you to have a significant sum saved for your proposed down payment. Lastly, you may be required to have a creditworthy individual cosign the loan.
Can bankruptcy affect my existing car loans?
If you are in the midst of your bankruptcy proceedings, you may not be worrying about your future car loans as much as you are worrying about your current ones. Well, your existing car loan is considered one of your secured debts. Meaning, when you signed for the loan, you agreed to pledge the car as collateral if you ever defaulted on the loan. In other words, you consented that your lender could exercise their right to repossess the car if you continually failed to meet your monthly payments.
Therefore, if you filed for Chapter 7 bankruptcy, you may discharge your car loan debt. But this may require you to surrender the car to your bankruptcy trustee, so they may use the sale to pay off your existing lenders. Or, if you want to keep the car during this time, you may have to go out of your way to complete a court-approved reaffirmation agreement, renegotiate with the car loan lender, or other relevant actions.
As for a Chapter 13 bankruptcy filing, you may keep your car, alongside the other property attached to secured debts. But this is so long as you catch up on your car loan payments, and remain current on them thereafter, as part of your court-approved repayment plan. Of note, the amount you owe on this loan may be lessened to its current value.
So if you want more clarity, please allow a competent Rockland County bankruptcy attorney to offer it. Schedule an appointment with The Law Offices of Allen A. Kolber, Esq., P.C. today.
