Can I Apply for an Auto Loan While My Chapter 7 Case Is Open?
When you are in the middle of a bankruptcy case, you cannot incur new debt, such as a car loan, unless you get court approval. Because a Chapter 7 bankruptcy is usually concluded with a discharge in 4 to 6 months, it is very very uncommon for someone to seek court approval for a new loan while in bankruptcy.
It is often better to wait until your bankruptcy is over to obtain a car loan. However, if you absolutely need a vehicle, consult your bankruptcy attorney for advice to avoid jeopardizing your bankruptcy case.
Can I Obtain a Loan Right Before Filing?
There are times when your attorney may advise you to secure a reasonable loan before you file bankruptcy. If that happens, your attorney may also advise you to complete a reaffirmation of that debt once you file the bankruptcy.
The reaffirmation agreement means you agree to repay the debt so you can keep the vehicle, and the debt will not be discharged during bankruptcy. You will be responsible for keeping current on the debt.
Questions About the Bankruptcy Process?
If you are thinking of filing for bankruptcy and have questions about the process, our attorneys can help. We can review your situation and help you to better understand what filing for bankruptcy can mean for you, your finances, your home, and car.
For more information regarding buying a car and bankruptcy, we have a great resource – How Bankruptcy Impacts Your Car
If you would like to schedule your first free visit, call our office.