Just how long you have to wait to finance a car after bankruptcy depends on the type of bankruptcy you file, and how far along you are in the process.
Buying a Car after a Chapter 7
If you can wait the four to six months it typically takes to complete a Chapter 7 and receive the discharge papers, it’s best you do. Lenders generally want a Chapter 7 completed before considering financing, and require a copy of your discharge papers to begin the process. As for how long you should wait once you receive the discharge papers, you can usually find financing immediately, which can help rebuild your credit sooner.
A Chapter 7 bankruptcy is a liquidation bankruptcy, and almost half a million cases were filed from June 2017 to June 2018. Any non-exempt property can be sold, or “liquidated,” to repay your creditors – and this can include a house or vehicle. If your car has equity that’s equal to or below your state’s vehicle exemption amount, you may be able to keep it. But, if you have to give up your car and you’re considering a new one, you may find it difficult to get approved for financing if the bankruptcy is still open.
Buying a Car after a Chapter 13
Just like a Chapter 7, you can immediately go to a dealership once you receive your bankruptcy discharge papers. But because subprime lenders understand the time it takes to complete a Chapter 13 bankruptcy, many are willing to finance someone who has permission from the court for a car loan.
In a Chapter 13 bankruptcy, whether or not you should wait to buy a vehicle depends on your situation. Because a Chapter 13 is a repayment bankruptcy and takes three or five years to complete, it’s possible to finance a car while the bankruptcy is open. If you don’t need a vehicle immediately, you can also wait until it’s discharged.
Buying a Car after a Dismissed Bankruptcy
A dismissal isn’t the same as a discharge. A discharged bankruptcy means it was successfully completed. A dismissed bankruptcy means it was never completed due to circumstances that include failing to complete filing requirements, or providing false information about finances, creditors, or assets. If your bankruptcy – either a Chapter 13 or Chapter 7 – ends up being dismissed rather than discharged, you may find it very difficult to finance a car. Once your bankruptcy is dismissed, the automatic stay is released and collectors can come after you for debts you owe, including your car.
Not Sure Where to Start?
If your bankruptcy has been discharged and you’re not sure where to go to start your financing journey, the good news is you don’t have to do the searching – we can do it for you. We know that not all lenders are able to handle open bankruptcies, and that’s where The Car Connection helps.
With our simple auto loan request form, and our nationwide network of dealerships, we want to connect you to a local dealer that can help you, even if you’ve dealt with bankruptcy.