Is it actually possible for me to finance an auto while I’m in the middle of a bankruptcy?
The answer is Yes. For clarification, it’s necessary to understand the major types of bankruptcy that we deal with.
First, there’s the Chapter 7 bankruptcy. This is the program where you essentially include all debts in your bankruptcy filing and upon discharge, you are no longer obligated to repay those debts. There are occasions when a debtor may perform what is called a “reaffirmation of debt,” however, for our purposes that is not usually a consideration.
In a Chapter 7 bankruptcy it is entirely possible to arrange auto financing prior to the discharge. There is a widespread misconception that the bankruptcy must first be discharged. Typically, most auto dealers and banks will inform you that you must have a discharge in order to qualify for auto financing.
The reasons behind their statement are usually due to the fact that they are unaware of the financing programs available or they were unable to qualify for these programs. In the case of the banks telling you to first get a discharge, they usually are using this as a delaying tactic. They’re really not interested.
Over the years, we have built several outstanding relationships with lenders that specialize in making this type of loan. For the most part, these lenders tend to be “exclusive” in that only select dealers are allowed to offer these programs within a given marketplace.
The other type of bankruptcy most commonly encountered is Chapter 13. This is a debt-repayment plan that is typically set up for a 3 to 5 year period. Obtaining auto financing while in this program is actually quite an easy process. One of the most common obstacles is a lack of thorough understanding of the process and procedures that must be followed.
Both Chapter 7 and Chapter 13 auto loans are closely regulated and monitored by the bankruptcy courts. These areas require a thorough knowledge and understanding of all the rules, regulations and processes that must be followed. Most auto dealers are severely lacking in this understanding.
We specialize in these loans. Through the years we have built up a level of trust and credibility with our lenders, the courts and the trustee’s office. Our experience and expertise give us the ability to accomplish what other dealers cannot.