One of the first things people tell you when you think about filing for bankruptcy is that it will wreck your credit for the future. While it’s true that bankruptcy does have a negative impact on your credit report and it can linger on that report for up to 10 years, it’s not true that your entire financial life is ruined for those 10 years. In fact, that’s one reason for contacting a lawyer and filing bankruptcy: to rescue a financial situation that is already ruined or fast on its way to ruin.
Yes, it can be more difficult to get credit when you are dealing with a bankruptcy or following a discharge of your Chapter 7 bankruptcy. But as you come out of the bankruptcy process and are able to make payments on time on any loans you reinstated, your credit score might actually start going back up. This can be helpful when you need to buy a car.
Another thing to keep in mind is that many car dealers and associated lenders have dealt with individuals who filed bankruptcy before. These lenders don’t always look solely at your credit score or the fact that there is a bankruptcy listed. They might look at your past vehicle loans to see if you paid them timely or avoided default on them even in the midst of your other financial issues. In some cases, that can be a boon for you. Lenders are often more likely to approve a vehicle loan when you’ve shown a history of paying those types of loans.
Go into the process with realistic expectations. Make sure you know what your credit report says and be realistic about what type of car and loan you can afford. Even after a Chapter 7 bankruptcy, you might be surprised at the options open to you.
Source: Auto Credit Express, “Buying a Car: Auto Loans after Chapter 7 Bankruptcy,” July 31, 2016