When you finish a bankruptcy filing you can either be discharged or dismissed. A bankruptcy discharge means that you've completed the process and are free to take on debt without the court's approval. Dismissal, though, isn't the outcome you want.
Bankruptcy Discharge Opens Auto Loan Options
Once your Chapter 7 or Chapter 13 bankruptcy is discharged, you can typically take on new debt fairly easily. However, your credit score can take a hit during bankruptcy, which means you may be left shopping for an auto loan as a bad credit borrower. The damage from bankruptcy lessens over time, but it could still show up on your credit report for at least seven to 10 years.
When you seek financing with a discharged bankruptcy you're likely to have to prove that your case is closed. It can take at least 30 days or more for your bankruptcy discharge to show up on your credit reports. This means that if you apply for lending right away, the lender may not see that your bankruptcy is completed.
To help with this, keep a copy of your discharge letter and court documents with your other auto loan paperwork – your lender is going to want proof your bankruptcy is discharged.
What Happens if Your Bankruptcy Is Dismissed?
Even though dismissal sounds similar to discharge, in the bankruptcy world, they have very different meanings. Dismissal means that something didn't go as planned and your case has been dropped or suspended.
There are several types of dismissals that can occur during bankruptcy, and depending on your filing and what caused it, you may not be able to file again in the future. The most common type of dismissal is typically for clerical errors or missing documents, this is called being dismissed without prejudice. These common mistakes can usually be fixed, and you can typically resubmit your bankruptcy filing soon after.
However, if you intentionally fudge your paperwork, attempt to keep assets hidden, or otherwise fail to meet the requirements of your bankruptcy, you're likely to be dismissed with prejudice. This means that you could face penalties and fines, and may lead to the court barring you from filing bankruptcy, possibly indefinitely.
Need a Car Loan After Bankruptcy?
When you need to find a vehicle loan after your bankruptcy discharge, you have many options to choose from. Unlike dismissal, which may impact your ability to qualify for financing until it drops off your credit reports. If your bankruptcy is dismissed it could show a lender that you're not ready to take on auto financing at this time. However, a discharge can signify that you're prepared to follow through, despite hardships, and some lenders may be willing to take a chance and extend you the car loan you need.
A good way to find a lender that can work with bankruptcy is to start right here at The Car Connection. Our nationwide network of special finance dealerships is signed up with lenders that are ready to work with you – bad credit, no credit, even bankruptcy don't have to stand in your way.
If you've been discharged from your bankruptcy filing and are ready to take on your next auto loan, simply fill out our fast, free, no-obligation car loan request form to take the first step!