For many people, cars are essential to their everyday lives. Cars are a lot of people’s sole source of transportation. It’s how they get to work, take their kids to school, go to the grocery store, and much more. That is why it is normal for people to express concerns about how bankruptcy might affect their means of transportation. We often hear the question: Can I buy a car after bankruptcy? The answer to which is… it’s complicated. We know that’s not what you want to hear, but there are many things to consider when attempting to buy a car after bankruptcy. In this post, our esteemed Louisville bankruptcy attorneys at O’Bryan Law Offices will answer your question of “Can I buy a car after bankruptcy?” and more.
If I file bankruptcy can I buy a car?
To answer the question, yes, but you need to be careful how you go about it. If you just filed for bankruptcy, you are more than likely not in the best financial position, currently. Your credit score has probably taken a pretty big hit. That’s the bad news. The good news, however, is that you’re much closer to improving your credit score than you were before you filed for bankruptcy. Bankruptcy will give you the opportunity to rebuild your credit, and once you do that, you’ll be in much better shape to purchase a car.
You might find that after discharging your debts through bankruptcy, you have some extra disposable income. If you can save up enough cash from this to buy a car, even if it’s not a very pretty one, that may be your best bet. It’s not impossible to use credit when purchasing a car post-bankruptcy, but it would be in your best interest to avoid it, if at all possible.
If you absolutely need a car right away and you have to take out a car loan to purchase one, try to opt for something as cheap as possible. Something that will allow you to get from point A to point B safely, nothing more. If you can find a cheap car with a car loan you can afford that doesn’t produce any extra financial strain, by all means do so. In fact, if you can make regular, on-time payments on this car, you will be able to begin rebuilding your credit right away. The trick is to know what you are able to handle financially. Remember, it’s not just the car payments themselves. It’s things like gas, insurance, registration, maintenance, and parking, too.
How long after bankruptcy can I buy a car?
If you don’t require a loan to buy a car, you don’t need to wait long at all. You can actually purchase one immediately after, given you have the money to do so. It may be that you saved enough after filing to purchase a used car or a family member or friend helps you out. In addition, if someone is kind enough to gift you a car, that is perfectly acceptable, too. Just make sure they give it to you after you’ve filed for bankruptcy so that you don’t have to deal with claiming an exemption on it.
If you need to take out a loan to purchase a car, it is a different story. It is still possible to buy one soon after filing for bankruptcy, but it is probably not in your best interest. We’ll explain to you why that is exactly.
When buying a car after filing for bankruptcy, you want to ensure you make the most out of this new start. To do this, it’s important to take time to set yourself up for your financial future, which is essentially what bankruptcy is all about. Part of that is getting the best loan terms for your auto loan.
Better terms, such as a better interest rate, can be very difficult when you have a poor credit score. If you just filed for bankruptcy, your credit score is certainly not going to be in the best shape. As a result, the loan terms offered to you will reflect that, meaning they won’t be great. We recommend waiting a while so that you’re able to build up your credit and thus, attract better loan terms for your vehicle. That way, you won’t be put in the same sticky situation you were in before your bankruptcy filing.
Buying a Car After Chapter 7
Kentucky Chapter 7 bankruptcy essentially works by liquidating your assets. It also stops creditors from going after you in an attempt to collect any money you might owe them. It will take roughly 3-5 months before your discharge is complete.
If you purchase a car before filing for bankruptcy, this will certainly cause problems in your claim. Not only might it be seen as a sign of fraud, but your bankruptcy trustee will likely need to sell your car under Chapter 7 for liquidation purposes. That is, of course, unless it qualifies for an exemption.
It is possible for you to apply for a car loan following your Chapter 7 discharge, but once again, the interest rates on any car will skyrocket significantly.
The best course of action is to give yourself time to rebuild your score and reduce your credit card debt following your discharge. The best way to do this? Start making sure you get all of your payments in on time. Instead of putting all of your money into a cheap car and it’s crazy interest rates right away, work on saving up enough to get a better car with lower rates.
The bottom line is this: the longer you wait to buy a car following bankruptcy, the better. No one is saying you have to wait the full 10 years for Chapter 7 to be removed from your credit report. We recommend waiting at least a year after your discharge. This will allow you enough time to improve your score and prove to lenders that you have overcome your financial issues.
Call the Louisville Bankruptcy Attorneys at O’Bryan Law Offices Today
Buying a car after filing for bankruptcy can be tricky, but certainly not impossible. We hope that this information was able to help answer your question Can I buy a car after bankruptcy? Our Kentucky and Indiana bankruptcy attorneys at O’Bryan Law Offices simply want to help you determine what is in your best interest. Whether it be getting a car right after filing or waiting a while to rebuild your credit, we can help. Call one of our Kentucky or Indiana offices today to begin recovering your financial future today.