If I File Bankruptcy, Can I Buy A Car?

Absolutely, and it’s a good thing too. Most new cars last about 175,000 miles. At 15,000 miles per year, a typical mileage rate for Chicagoland, that’s a little over eleven years. So, in some cases, a debtor might need another vehicle during bankruptcy. Assume Phil drives a ten-year-old car when he filed Chapter 13 bankruptcy. Especially if his bankruptcy lasts the maximum five years, he’ll most likely need a new car before the judge closes the bankruptcy. Even if Phil drives a new car, he might need another one before his bankruptcy falls off his credit report.

A good Chicago bankruptcy lawyer helps debtors maximize their fresh starts before, during, and after filing. Lawyers properly evaluate cases and strategically fill out the complex forms. During bankruptcy, attorneys represent debtors at case management meetings and represent them in court if things go sideways. Then, a Chicago bankruptcy lawyer helps former debtors responsibly use credit and raise their scores.

Post-Bankruptcy Purchases

Most bankruptcies stay on most credit reports for seven or ten years. A prior bankruptcy doesn’t prevent a new car purchase.

Debtors should be upfront about their credit histories. Inform the salesperson, not the finance officer, about your prior bankruptcy. Some dealers flatly refuse to work with damaged credit buyers. Don’t take this refusal personally. Just go to another dealer.

We mentioned before and after above. If your bankruptcy has a plausible before-and-after explanation, a dealer is much more likely to work with you. For example, perhaps Phil filed bankruptcy because he lost his job, but now he’s working again.

Let’s get real for a moment. Damaged credit buyers will pay more for vehicles and have limited selection. Fortunately, a Chicago bankruptcy lawyer directs former debtors to sellers that work with these buyers. That’s not hard to do. Many banks like working with high-risk borrowers because they can charge higher interest rates.

Mid-Bankruptcy Purchases

These purchases are more complex because the debtor is still under court supervision. But a mid-bankruptcy purchase certainly isn’t impossible.

For starters, the debtor must have a legitimate need for another vehicle. A desire for a change or upgrade isn’t good enough. On a related note, the new vehicle must be substantially similar to the replaced vehicle.

Before a Chicago bankruptcy lawyer files a motion to purchase the car, the seller should draw up a dummy contract that includes information like the purchase price, interest rate, and monthly payment.

Creditors often oppose these motions. They argue that if the debtor can afford to buy a new car, the debtor can afford to repay additional debts. However, as long as a lawyer laid the proper groundwork, as mentioned above, judges usually approve these motions anyway.

 Work With a Tough-Minded Cook County Lawyer

No matter what kind of financial problem you are having, bankruptcy could be a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. The sooner you reach out to us, the sooner we start fighting for you.