This week, our blog is devoted to the topic of “life after bankruptcy.” Yesterday, we highlighted rebuilding credit and establishing emergency savings after bankruptcy. Today’s focus will be on qualifying for an auto loan.
Many Milwaukee residents worry that they will never again be able to qualify for a home or auto loan after filing for bankruptcy. While a bankruptcy can remain on your credit report for up to 10 years, individuals who work to build their credit scores following a bankruptcy filing are often able to qualify for a home or auto loan much sooner.
Ultimately, it is up to lenders to decide when a consumer should be approved for an auto loan after filing for bankruptcy. In fact, it’s possible for a lender to approve an auto loan just days after a consumer’s Chapter 7 bankruptcy is finalized.
When it comes to a Chapter 13 bankruptcy, the loan could potentially be approved while the repayment plan is still in progress so long as the bankruptcy trustee agrees that the car is vital to the consumer’s ability to repay the debts according to the plan.
Of course, consumers can expect to pay interest rates that are higher than conventional rates when applying for an auto loan after bankruptcy, which is why many people choose to wait a while until their credit scores have improved before applying for an auto loan.
Additionally, it’s important to be on the lookout for predatory lenders who prey on consumers with poor credit. Before applying for a loan, it’s important to conduct research on the lender to make sure that they are in good standing and can be trusted.
Please check back tomorrow for information on qualifying for a home loan after a Chapter 7 or Chapter 13 bankruptcy.
Source: Bankrate.com, “Bankruptcy timeline: Rebuilding credit,” Brigitte Yuille, June 2, 2014