Bankruptcy Auto Financing
For consumers in need of bankruptcy auto financing, buying a car and making timely payments can be a good way to restore damaged credit. While there are many lenders who claim to offer easy terms for borrowers with bad credit, careful research is always a good idea. Some lenders who claim to specialize in bankruptcy loans also specialize in high interest rates and aggressive terms. However, there are other lenders who will work with consumers who are in need of bankruptcy auto financing that offer fair terms and an achievable payment plan. Whether a consumer has filed for Chapter 7 or Chapter 13 bankruptcies, specialists in this area of lending can help a potential borrower work their way through the red tape and attain a badly needed automobile. Many consumers who have experienced insolvency issues feel a good deal of frustration and shame. These feelings can go a long way toward preventing any steps that would rebuild credit and rectify a difficult situation.
The requirements that are involved in attaining bankruptcy auto financing can vary from lender to lender, but in general will have certain things in common. For individuals who have filed for Chapter 7 bankruptcy, most lenders will require that the potential borrower will have met with all creditors at a mandatory 341 meeting. No lending can take place before this meeting has occurred. In the case of Chapter 13 bankruptcies, the borrower must attain a letter from the legal trustee that is overseeing the case. This letter, or Authorization to Incur Debt, lets a lender know that the borrower is able to handle more debt in addition to the debt that is owed in the Chapter 13 proceedings. Other criteria can include a minimum monthly and yearly income, and no bankruptcies that have been dismissed. If an applicant has experienced multiple bankruptcies, this could prevent them from attaining financing. Chapter 7 bankruptcies are happening much less frequently than Chapter 13 filings. This is due to more stringent laws in this area. While these issues can certainly complicate the bankruptcy auto financing process, they do not make attaining a needed automobile an impossibility.
Many potential borrowers wrongly assume that bankruptcy auto financing is something that they will never be able to take advantage of. This is not necessarily true. Even in open Chapter 13 bankruptcies, financing for an automobile is still a possibility. A down payment is usually required for buyers who have gone through a bankruptcy. The lack of a down payment can sometimes mean that the loan will offer interest rates and terms that less than friendly. In the case of a Chapter 7 filing, a borrower will most likely need to apply for financing before the proceedings have been discharged if they hope to be successful. Even if a borrower has had an automobile repossessed as part of a Chapter 13 or Chapter 7 filing, this may not preclude them from attaining another vehicle loan. The Bible talks about the importance of honoring God. "The fear of the Lord tendeth to life: and he that hath it shall abide satisfied; he shall not be visited with evil." (Proverbs 19:23)
When pursuing bankruptcy auto financing, a consumer should avoid certain pitfalls. Interest rates on some sub prime financing can range from single digit rates to rates all the way up to rates in the mid twenties. Large down payments may also be required. Careful comparison is the only way to insure that a potential borrower obtains the best terms available. When credit issues are extreme, a borrower can almost always expect to pay higher than ordinary interest rates. Some automobile dealers will offer slightly lower interest rates, but will charge significantly more for their vehicles. This is particularly true for dealers who cater to poor credit buyers. A wise consumer will make sure that they research the true value of the automobile so that they may make a smart decision when committing to buy. However, when purchasing and financing a vehicle from the same dealer, there can be benefits for the buyer. When a dealer is anxious to make a sale, lending terms and extra concessions can sometimes be offered to the buyer in order to seal the deal. If a buyer has been able to save up a hefty down payment, bankruptcy auto financing for a brand new car may be a stronger possibility than a used one. In addition to this, the interest rates on new car loans can generally run much lower than the rates that are charged for used cars.
When seeking bankruptcy auto financing, an individual might benefit from gaining an understanding of the laws that apply to bankruptcy proceedings. Those in financial difficulty may find themselves in the position of needing a new beginning. The aim is to make sure that this is done in a way that also respects the rights of the creditor and works to ensure the repayment of debt. Chapter 13 filings involve a reorganization of debt and the consumer will work toward repaying the debt that is owed. A Chapter 7 filing involves the liquidation of property and a dismissal of remaining debt. Relatively recent changes in the law have made the Chapter 7 approach much more difficult to pursue. Chapter 13 filings are now much more prevalent. These bankruptcies will usually cover a period of three to five years. During that time, the individual will work toward paying off debt. At the end of this period of time, any debt that is remaining will be discharged.
Bankruptcy Auto LoansConsumers on the look out for bankruptcy auto loans often fear predatory interest rates, unreasonable fees and unyielding terms. Many online lenders promise automobile financing that can seem a little too good to be true. Boasting that a potential borrower's credit history is not a concern, some lenders promise speedy approval with few questions asked. Of course, the wise borrower will be sure to ask a good deal of questions before signing on the dotted line. Playing on the borrower's fear and embarrassment, some of these lenders employ predatory practices. Careful comparison shopping when it comes to seeking bankruptcy auto loans is a step that no consumer will regret taking. Individuals who have gone bankrupt may decide to file for either a Chapter 13 or a Chapter 7. The difference between these two methods of filing is rather straight forward. A consumer who files in the Chapter 7 category is basically giving up certain assets and walking away from many debts free and clear. With a Chapter 13 filing, the debtor wishes to work out a plan to attempt to repay back the money owed. By doing so, the debtor can hope to keep most assets. Whichever type of filing a debtor may have chosen, the availability of this financing is an important concern.
Different lenders will have different terms and requirements for consumers who need bankruptcy auto loans. Many lenders will require a minimum monthly income as well as a minimum credit score. Any bankruptcy proceedings will generally need to have been completed before a potential borrower can move forward. If an automobile has been repossessed outside of any Chapter 13 or Chapter 7 proceedings, this will undoubtedly go a long way to limit any attempts at obtaining vehicle financing. While it is not impossible to find success in getting bankruptcy auto loans, it can certainly be challenging. In addition to shopping around for the best prices on a desired automobile, a wise consumer will also carefully shop around for the best interest rates and terms that may be available. The need for sub prime financing does not mean that a buyer should become desperate and agree to unreasonable or predatory terms and rates. The Bible instructs believers to seek God with all their heart. "And ye shall seek me, and find me, when ye shall search for me with all your heart." (Jeremiah 29:13)
When applying for bankruptcy auto loans, a potential borrower should not feel obligated to pay up front application fees or processing fees. Some predatory lenders may try to take advantage of the desperation of sub prime borrowers by attaching unreasonable costs to the application process. There are also lenders who have specific lending programs that cater to a variety of financial issues and problems. In addition to bankruptcy auto loans, some lenders offer financing that deals with issues such as past repossessions, divorce issues, late payments, and charge offs. It is generally a good idea to make sure that financing is within the realistic realm of possibility before beginning the search for a new or used automobile. To shop around for a specific car before knowing if financing will be available could prove to be a huge waste of time, particularly for the consumer with credit history issues. Many factors will determine just what kind of interest rate is attainable for the consumer who is seeking special financing. In addition to a borrower's current credit score, payment history and debt to income ratio, the make and model of the desired vehicle as well as the mileage can have a bearing on the interest rate. The availability of a down payment can also influence the interest rate that is offered.
When individuals file for bankruptcy, they will often choose to either file for Chapter 13 or Chapter 7. In the event of a Chapter 13 filing, there are specific things that must take place before pursuing bankruptcy auto loans. In a Chapter 13, the debtor has agreed to hang on to certain assets and attempt to pay back the debt that is owed. The arrangements that are made prevent creditors from taking further action. The court appoints a trustee to oversee the process and a timeline for paying back delinquent debts. Once the case has been discharged, the borrower will work within the court appointed guidelines to make good on any money owed. Before this borrower can obtain financing for a vehicle, the trustee overseeing the case must draft a letter explaining the amount of money that the potential borrower currently owes and the amount of additional debt that the borrower can safely incur. In some cases, there is no room for another loan and the trustee will recommend that the debtor be denied financing.
Under a Chapter 7 filing, the debtor will see many assets sold to pay off debts. While this approach can do more harm to an individual's credit score, it does get them out from under the mountain of debt that originally caused their financial woes. It is generally impossible to be approved for bankruptcy auto loans while a Chapter 7 case is under consideration. A consumer's credit rating is left in tatters once the proceedings have been completed. Most property of a personal nature is lost in these kinds of proceedings. Credit card and medical debts are generally discharged, but much personal property must be sold. It can be very difficult to obtain financing after this type of filing, but not impossible.