When you get overwhelmed with debt, you often start losing a lot of property. Before making the decision to file, you may have lost your home, vehicle, and various other possessions that you were forced to sell off.
Once you file for bankruptcy and start getting your finances back in order, you’re often in between a rock and a hard place. You need a working vehicle to get to and from work, but you’ve also just filed for bankruptcy on your past debts. Can you really get a new vehicle after you file for bankruptcy? Will your options be limited?
If you’re asking yourself these questions, then you’ve come to the right place. Learn everything you need to know about getting a vehicle after filing for bankruptcy below.
Are My Options Limited After Filing for Bankruptcy?
Depending on how long ago you filed for bankruptcy, your options may be limited. Most automobile lenders don’t want to see a lot of unpaid debts when they’re considering financing a car for you. Instead, your best bet is to wait until your debts are officially discharged by the court. That means your bankruptcy case must be considered closed. It usually takes about 120 days from the time you file for bankruptcy until your debts get discharged.
Can I Finance a New Car?
Car lenders will still want your business once your debts are officially discharged. That doesn’t mean that it won’t be more difficult or expensive to finance your new car, though. Your lender may want to charge a high-interest rate on any loan. If that’s the case, then you’ll need to consider whether your car is a necessity or luxury.
If your car is necessary, then you can get it financed even after bankruptcy. You’ll need to take extra care when taking out a new auto loan, though. Never make the purchase if you’re unsure about whether you can afford the payments or not. Also, watch out for predatory lenders who want to take advantage of you by charging outrageous interest rates or bankruptcy-related fees.
Will my New Car be at Risk?
One of the most important questions that you’re likely wondering is – will my new car be at risk due to my prior bankruptcy claim? First, it’s crucial that you keep any court-ordered payment plan in mind if you’re thinking of buying a new car. You never want to stretch yourself too thin, and your bankruptcy payments need to be your priority right now.
If you keep on top of your payment plan or your debts get discharged, then your new car won’t be at risk due to your prior bankruptcy claim. It might be at risk for repossession if you start falling behind on your new payment loan, though.
Preparing Yourself for a Big Purchase
Are you considering taking out a loan to finance a new vehicle after bankruptcy? If so, then there are a few things you can do to help the process easier. Take the following tips into consideration as you prepare yourself for your big purchase:
· Consider rebuilding your credit before buying your new car
· Start prioritizing paying your current bills on time
· Shop around for a loan before making a decision
· Consider buying a used or comparatively inexpensive vehicle if possible
· Work on your debt to income ratio (https://www.investopedia.com/ask/answers/081214/whats-considered-be-good-debttoincome-dti-ratio.asp)
In general, the longer you can wait after filing for bankruptcy to buy your new car, the better off you’ll be. Despite that, it’s not uncommon for Americans to purchase a car shortly after filing out of necessity.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.