A bankruptcy isn’t the end of your dream to get a car

If you’re like most Americans, you hear the work bankruptcy and you cringe a little. Most people think that this is the end of the dream to get a loan to get a new car. This is in fact, not true. The first step is to understand the two more common types of bankruptcies and how they can effect your ability to get an auto loan.

Chapter 7

This is the more common and easier type of bankruptcy to have on your record if you are looking to get an auto loan. When you file for a chapter 7 bankruptcy, you are forgiven of all past debts once the case is discharged. One important requirement in order to get your bankruptcy discharged, is that you don’t have sufficient income to allow you to pay a portion of your debt.  If this is not the case, you may need to file for chapter 13.

Chapter 13

When you have sufficient income and you are looking to consolidate debt into manageable payments, this is your best option. Generally speaking, payments are broken up over 3 to 5 years so it is more manageable.

I’ve declared bankruptcy, and it was discharged. What now?

The first step after your bankruptcy is discharged is to reestablish your credit. The most common way to do so is by opening up a secured credit card. Here, you can put money on a credit card that you will use as your limit, and you can start rebuilding the creditors trust. You will see, within a matter of a few months (as long as you pay the minimums on time) your credit score will be well on it’s way up. You are now even closer to getting that auto loan for that car you’ve wanted! Now all you need to do is fill out an application and you’re ready to go!