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Buying A New Car After Chapter 7


Yes, bankruptcy leaves your credit report dented like the survivor of a demolition derby. The key word: survivor. Scoring a car loan after bankruptcy is possible. You simply must work smarter before you can slide behind the wheel.

Before visiting a dealership or a car-buying website, perform some do-it-yourself ego repair work. With your obligations liquidated, discharged, or satisfied, as a post-bankrupt consumer you have a shot at financial renewal. So, your credit score is in the basement. Think of it as the foundation from which your future score will soar.

The most advantageous move is to go to your bank or credit union and seek preapproval for an auto loan. They may surprise you and present conditions and interest rates that make the car-buying experience much easier.

The good news is that yes, you can buy a home after filing for Chapter 7 bankruptcy in Minnesota. The bad news is that, depending on your case, you may not be able to purchase a home as quickly as you would like.

After filing for Chapter 7, there is a mandatory waiting period before you can apply for a mortgage. The waiting period after a Chapter 7 depends on what type of mortgage you are applying for. Although there are exceptions, the standard waiting period for each type of mortgage is:

Obtaining a mortgage becomes slightly more complicated when your bankruptcy occurs in conjunction with a foreclosure. If the foreclosure occurred before the bankruptcy, the waiting period starts at the date of your debt discharge and the standard waiting period for each type listed above applies. If your home was foreclosed on after your bankruptcy however, the waiting period may be extended, depending on the unique circumstances of your case.

In most cases, though, it takes more than a year to recover after declaring bankruptcy. So most home buyers will have to wait two years or more before buying real estate. Take this time to get your credit score as high as possible and save for a bigger down payment. Both strategies will help you get a lower mortgage rate and a more affordable home loan when you do buy.

Keep in mind that a bankruptcy filing stays on your credit reports for 7-10 years. Even after you become mortgage-eligible, your lender may still require legal documentation from the bankruptcy court to verify your status when you apply.

And in many cases, dealers won't even tell you the car's price, he says. "Most don't set the price until after they look at your credit report," Kukla says. Once they do, they'll offer you two or three vehicles to choose among.

At The Car Connection, our goal is to remove the challenges of getting financed for a vehicle. Through technology, flexible financing options and exceptional customer service, we want to give you the power to control your car-buying experience.

People who don't have enough income to pay something to unsecured creditors (like credit cards and medical bills) are well suited for this chapter. You'll qualify if, after comparing your income and expenses, you don't have enough left over (disposable income) to make a meaningful payment in a Chapter 13 bankruptcy. In that case, you'll have passed the "means test."

A large car payment can also affect whether you can keep the vehicle and continue making payments after your qualifying debts get wiped out (discharged) in a Chapter 7 case. Ordinarily, you would need to enter into a reaffirmation agreement (a new contract) that will survive the bankruptcy. You'll make the reaffirmation agreement payments after the bankruptcy. If you fail to do so, the lender will be able to repossess the car. You'll be responsible for any deficiency (the difference between your balance and the auction proceeds).

Here's the potential problem: You can only reaffirm the loan if you can afford the payment. You must prove that, after your expenses, you have enough left over to cover the debt. If the reaffirmation shows that you can't afford the payment and your attorney is unwilling to sign


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