After Bankruptcy Auto Loans

If you have filed bankruptcy in the past, you might believe that it’s impossible to get an auto loan again. In fact, auto loans for people with bad credit are not as hard to get financed, because the lender can use the car as collateral against the loan.

What is a Chapter 13?
A Chapter 13 is designed for individuals with a regular income who desire to pay their bills but is currently unable to pay all of them. The purpose of chapter 13 is to enable financially distressed individuals, under court supervision and protection, propose and carry out a repayment plan to creditors over an extended period of time.

If you need to purchase an automobile while in a chapter 13 you must get a letter from your trustee stating how much dept you can add to your current dept. This some times can take up to a week to get. After the special finance manager secures a auto loan for you, the trustee’s will want to review all documents and contracts prior to you signing anything.

What is a Chapter 7?
A Chapter 7 bankruptcy provides an "order of relief" that triggers an "automatic stay" thus all creditors and collectors are prohibited from pursuing you or your property outside of the bankruptcy proceeding.

Chapter 7 bankruptcies are also known as a "straight bankruptcy" or "liquidation bankruptcy" because the Trustee gathers and sells your nonexempt assets and then distributes the proceeds to your creditors in accordance with the provisions of the bankruptcy code.

You are permitted to retain certain “exempt property" but the bankruptcy court Trustee liquidates all remaining assets. You should also understand that if you file a chapter 7 bankruptcy you could loose some or all or your property, this may be an advantage or disadvantage depending on how much equity you have in the asset.

The Chapter 7 Bankruptcy Code allows you to keep property or assets by claiming them as "exempt" under either Federal or State exemption laws; whichever applies to your State.

If you need to purchase an automobile while in a chapter 7, you must wait till after the 341 hearing has been held. If no creditors show up for this hearing you are good to go.

Bankruptcy Changes
Now that the bankruptcy laws have changed, it won’t be as easy for some of those who are considering bankruptcy. Everyone wanting to file, will have to get credit counseling before they can file a bankruptcy case. Anyone with higher incomes will not be allowed to file for a Chapter 7, but will instead have to repay at least some of their bills under Chapter 13. With new requirements on bankruptcy lawyers, it will be harder to find an attorney to represent you in a bankruptcy case.

List of Changes
Counseling Requirements
Restricted Eligibility for Chapter 7
Some Chapter 13 Filers Will Have to Live on Less
Property Must Be Valued at Replacement Cost
State Exemptions Aren't Available to Recent State Residents