Whether you’re going through a Chapter 7 or Chapter 13 bankruptcy, you may be wondering how your bankruptcy is going to end. Your bankruptcy can either be discharged or dismissed. If your bankruptcy is dismissed, you may find it difficult to get approved for auto financing, since lenders like to see a bankruptcy as discharged.
Dismissed vs. Discharged Bankruptcies
A dismissed bankruptcy isn’t the same as a discharged bankruptcy. A discharged bankruptcy means you successfully completed your bankruptcy, while a dismissed bankruptcy means you didn’t finish the process.
According to the legal experts at Nolo.com, a bankruptcy can be dismissed with or without prejudice. If it’s dismissed with prejudice, it could mean you did one of these things:
- Committed bankruptcy fraud
- Abused the process
- Willfully disobeyed the court’s order
- Filed multiple bankruptcy cases to delay paying back your creditors
When a bankruptcy is dismissed without prejudice, it's generally the result of a mistake in the process, such as the filing of incorrect forms. This is an easy thing to bounce back from, and you can refile immediately to fix the issue.
Where to Get a Car Loan after a Dismissed Bankruptcy
When your credit score is tarnished, you most likely need to get financed with a subprime lender. These lenders work through special finance dealerships, focus on bad credit auto financing, and like to see that a bankruptcy has been discharged. So, you may find it difficult to get approved if your bankruptcy was dismissed.
If it was dismissed, then your best bet is to check out a buy here pay here (BHPH) dealer. These dealerships are also lenders, and offer loans on their cars in-house. You have a better chance of getting approved for auto financing through one of these dealers, since most don’t run credit checks. Even if they see a dismissed bankruptcy, they generally only check to see if you have the income and down payment necessary to finance a vehicle.
Although it’s easier to get approved for financing at a BHPH car lot, keep in mind that your interest rate is likely going to be in the double digits, and that you may not be able to improve your credit over time with one of these loans.
This is because some BHPH dealerships don’t report on-time payments to the credit bureaus. In addition, they may require you to make weekly or bi-weekly payments, sometimes in person.
The Bottom Line
It’s possible to get a car loan after a dismissed bankruptcy, but you may not be able to work with a subprime lender. Ideally, your bankruptcy should be discharged to avoid getting turned down for financing. If you’re dealing with a dismissed bankruptcy but need a vehicle, we want to help.
At The Car Connection, with our auto loan request form, and nationwide network of dealers that know how to handle unique credit situations such as bankruptcy, we want to connect you to a local dealership that can help you get financed. Get started right now to get the bankruptcy car loan you need!