If you are not well versed in the Bankruptcy laws and reglulations, here are some tips and information out there than can help you purchase a vehicle, even if you are in the middle of a Chapter 7 or Chapter 13 Bankruptcy.
1. There are two separate types of consumer bankruptcy cases. Chapter 7 and Chapter 13. A Chapter 7 case is a liquidation of debts and certain assets. It is usually closed (discharged) within 3-5 months of initial filing. A Chapter 13 BK is basically a repayment plan of certain debts. Those are usually a 36 or 60 month plan put in place where a customer commits all disposable income to repaying part or all of their debts.
2. There are multiple banks that lend to both open 7 and open 13 customers, and we are partnered with most of them to get you into a vehicle. There are a lot of local dealerships that turn away customers and make them come back after their BK has been discharged, we will NOT do that.
3. A customer in a Chapter 13 has to get permission from the trustee or judge to purchase. They do this by filing a Motion to Incur Debt. If they are approved they are granted an Authorization to Purchase. This process can take as little as two days, and as much as several weeks. If you have your letter allowing you to incur dept, please bring it with you when you come in to Georgetown Auto Sales.
4. A CHAPTER 7 CUSTOMER NEVER NEEDS PERMISSION FROM A TRUSTEE TO PURCHASE. No involvement from their attorney, judge, trustee- nothing. It's a regular car loan without the possibility of negative equity.
5. There are a number of ways it can be a benefit to the customer to buy before discharge. No negative equity, ever. Any trade-ins can be simply surrendered to the court without prejudice. Once a customer files BK any current auto loans stop reporting to the credit bureaus. So if a customer files BK one year into a 72 month loan and decides to reaffirm that loan, then they could make 60 payments without earning any installment credit. Post petition debt reports to the bureau upon loan inception.
We will work hard for you to get you approved and riding with as little steps as possible. If you have an open BK question, we are more than happy to help. It makes us sad and frustrated when customers are told they can't buy a vehicle until their BK is discharged. Please feel free to apply online or give us a call in person. Georgetown Auto Sales is here to help if you are in bankruptcy, have closed your bankruptcy, or if you have bad credit, no credit, or slow credit.