Bankruptcy Car Loans

There are two primary types of personal bankruptcies, Chapter 7 and Chapter 13. Bankruptcy car loans can be obtained in both situations however, after bankruptcy auto loans are much easier to obtain with a fully discharged chapter 7.

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The reason after bankruptcy auto loans are easier to obtain from a chapter 7 is because people are in a much better position financially. In the case of a fully discharged chapter 7 bankruptcy, a person’s debt obligations are completely discharged or forgiven, meaning they are no longer obligated to pay for any past debts, making it easier to afford a new car loan payment.

With chapter 13 bankruptcy car loans, a person’s overall debt is renegotiated to a lower amount and scheduled payments are made over a three or five year term. Any new debt incurred such as an auto loan, not only adds additional strain to the monthly payments, but must also be approved by a trustee adding an additional layer of red tape and car loan underwriting.

The morality of after bankruptcy auto loans

This information is not provided to offer any financial or legal advice – just the facts as it relates to the way auto finance companies underwrite bankruptcy car loans. From a moral perspective, one would think that people who pay their bills should be rewarded for doing so, as in the case of chapter 13 bankruptcies, but that’s simply not how it works with after bankruptcy auto loans.

The truth is, not only is it easier to get approved for bankruptcy car loans from a discharged chapter 7 bankruptcy, there are even more auto finance companies willing to lend money to people that fall into this category. In fact, there are some auto finance companies that make this credit profile one of their core lending niches.

Chapter 13 bankruptcy car loans

If you’re currently in a chapter 13 bankruptcy, a buy here pay here car dealer may be your best option for after bankruptcy auto loans. In this scenario, the auto dealer underwrites and extends the credit and is not limited to independent, third party auto lenders. Buy here pay here car loans or in house auto financing is not available from all car dealers. If you are currently in a chapter 13, click here for more information about chapter 13 bankruptcy car loans and buy here pay here car lots.

Bluesky Auto Finance is integrated with lenders that offer bankruptcy car loans for people that have a discharged chapter 7 as well as a network of auto dealers throughout the United States. Keep in mind however, that there are other things lenders consider when granting after bankruptcy auto loans such as length of employment and monthly gross income.

If you’re currently in a chapter 13, in house dealer financing may be your best option for bankruptcy car loans and we recommend Drive Time, a national buy here pay here car lot that specializes in bad credit and after bankruptcy auto loans.