Since the new bankruptcy law took effect on October 17, 2005 fewer Americans can file for a chapter 7 bankruptcy and many more are forced to file a chapter 13. In either case you may qualify for an auto loan.
Bankruptcy Auto Loans – Chapter 13
To qualify for an auto loan while in a chapter 13 bankruptcy you must obtain an authorization to incur debt from the trustee of the bankruptcy. The authorization should include the monthly payment amount. Without the authorization from the bankruptcy trustee, lenders will not even consider the loan. This is due to fact that if a lender was to approve an auto loan for a person in bankruptcy without the knowledge of the trustee the consumer could add the new auto loan lender to the list of creditors in the bankruptcy.
An authorization to incur debt does not guarantee that a lender will approve the loan. The fact is that most lenders will not finance a person in bankruptcy. The few lenders that will approve an auto loan while in bankruptcy usually wants the consumer to have completed two thirds of the bankruptcy.
Bankruptcy Auto Loans – Chapter 7
It is much easier to obtain an auto loan if you file a chapter 7 bankruptcy. Unlike a chapter 13 bankruptcy a chapter 7 relieves the consumer of all the debt included in the bankruptcy. Many lenders will consider lending money to people that have just completed a chapter 7 bankruptcy.
The lenders described above often do not lend directly to the consumer. Instead they offer their services to leading car dealers. That’s where LotPro.com can help. Our dealers have access to bankruptcy auto loan lenders. Simply complete the online car loan application and a leading dealer in your area will guide you through the process and provide you with car financing options during or after a bankruptcy.