Bad Credit and Bankruptcy OK

If you have experienced bankruptcy, you are well aware that it affects all aspects of your life. One of the main decisions during personal bankruptcy is whether or not to finance a car. What most people don't know, however, is that getting a auto loan can be quite possible after filing for bankruptcy and it's also a great way to re-establish your credit. However, there are a few questions that must be answered in order to fill out a bad credit auto loans with bankruptcy car loan application.

Firstly, you must know what type of filing your bankruptcy is. Is it a Chapter 7 or a Chapter 13? A chapter 7 bankruptcy is generally less intensive and over in a matter of months. Chapter 13 bankruptcies can last up to 5 years, so be sure you know which bankruptcy best fits your situation because they are very different types. If you're in a Chapter 7 bankruptcy as we speak, you will have to wait until your creditor meeting (also called a 341 meeting) and most bank lenders recommend applying for a bankruptcy auto loan after your situation has been discharged.

If you're currently in a Chapter 13 bankruptcy, the process differs. You are required to contact the trustee and have him request a motion to incur additional debt from the court. Chapter 13 bankruptcies are based off of income and expenses, and before you can acquire a car, you'll have to get approval before you take on any more large amounts of debt. If you are approved, you will receive the additional debt. Remember to bring your court documents with you when you apply for your car loan because you will need written proof that the court is allowing it.

Another important point you must be aware of is that there are two distinct ways to finish a bankruptcy. It can either be dismissed or discharged. It is more common for a Chapter 13 filing to be dismissed than in a Chapter 7 and vise versa.

If your bankruptcy is discharged, it means you've successfully followed all of the court's guidelines. Once this has happened, the court will issue you a letter of discharge. Keep this letter for proof that your bankruptcy has been discharged. After this, it is time to start rebuilding your credit.

There are two types of credit to keep in mind - revolving credit and installment credit. You must re-establish yourself with both.

A credit card is a good example of revolving credit. Not everyone qualifies for an unsecured credit card, so you may have to apply for a secured one. Secured credit cards have limited funds to ensure you don't overspend. Look for a company that will change your card to an unsecured one after about a year, assuming you will make your account payments on time. It's always a good idea to use no more that 30% of your credit line. Using any more than that has the potential to lower your credit score.

An example of installment credit is an auto loan. This type of credit can be improved with a bad credit auto loan. One of the best things about this kind of loan is that you have the potential to drive a fairly new, low-mileage car while simultaneously re-establishing your credit score.

Even if you've thought about or already experienced filing for bankruptcy, there are still answers out there for you. Don't delay on getting bad credit auto loans online. The sooner that you decide to go ahead and get started, then sooner you could possibly realize that bad credit or bankruptcy car loans can be a great option for you!