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Going through a bankruptcy lowers your credit scores, but it can also give you a fresh start, financially. Once finished, you may think that it is next to impossible to get approved for credit again, but usually that is not the case. At Federal Auto Loan, we specialize in helping people get connected to local dealerships who know how to work through your unique credit situation. Many of our network dealers have loan options for all types of bad credit situations, including bankruptcy. With the second chance you need, you can get back on the road and on the way to rebuilding your credit.
Following a setback like this, it can be difficult to build your credit back up, but getting a car loan after bankruptcy is possible. A bankruptcy car loan is actually a good way to help your credit recover once you’ve received a discharge. The process of getting a car loan following a discharged bankruptcy is fairly simple.
Just as you would with any other type of bad credit auto financing, you need to meet the lender’s requirements to qualify. Along with meeting the income, employment, and residency requirements most lenders look for, there are a few tips to keep in mind:
A Chapter 7 bankruptcy is considered a liquidation bankruptcy. This means your nonexempt personal assets can be seized and sold in order to pay off your debts and provide you with a fresh start. A Chapter 7 bankruptcy is relatively quick, and typically lasts only three to six months before being discharged, but, unfortunately, the bankruptcy filing stays on your credit reports for up to 10 years.
If you file for Chapter 13 bankruptcy, you set up a repayment plan, of either three or five years, in which you pay back all or part of your debts. This happens under the court’s protection, so you pay a fixed amount, monthly, to your bankruptcy trustee, which is then distributed amongst your creditors. The biggest advantage of this type of bankruptcy is that you have the opportunity to retain your property and assets. A Chapter 13 bankruptcy filing stays on your credit reports for up to seven years, but there are auto loan options that you can explore both during and after it.