Auto Financing During Bankruptcy Made Simple
Filing for bankruptcy doesn’t mean you have to put your life on hold—especially when it comes to reliable transportation. At Georgetown Auto Sales, we help drivers secure financing during both Chapter 7 and Chapter 13 bankruptcy situations. Whether your case is open, discharged, or still in progress, our team works with lenders who understand your situation and are ready to help.
Understanding Your Bankruptcy Options
There are two primary types of consumer bankruptcy cases, and each impacts your car-buying journey differently:
Chapter 7 Bankruptcy
Chapter 7 is a liquidation of debts and certain assets. Most cases are discharged within 3 to 5 months. The good news? You can purchase a vehicle during an open Chapter 7 without needing permission from a trustee, judge, or attorney. It functions like a standard auto loan—with the added benefit of avoiding negative equity.
Chapter 13 Bankruptcy
Chapter 13 involves a structured repayment plan lasting 36 to 60 months. If you’re in an active Chapter 13, you’ll need approval from the court to take on new debt. This is done by filing a Motion to Incur Debt. Once approved, you’ll receive an Authorization to Purchase, which allows you to move forward with financing.
We Work With Bankruptcy-Friendly Lenders
Many dealerships turn customers away during an open bankruptcy—but that’s not how we operate. Georgetown Auto Sales partners with lenders who specialize in working with Chapter 7 and Chapter 13 customers. That means more opportunities, more approvals, and less waiting.
What You’ll Need to Bring
- Valid driver’s license
- Proof of income
- Proof of residence
- Authorization to Purchase (for Chapter 13 customers)
Why Buying Before Discharge Can Help
Buying a vehicle before your bankruptcy is discharged can actually work in your favor:
- No negative equity carried into your new loan
- Option to surrender previous vehicle loans without penalty
- Start rebuilding credit immediately with a new installment loan
Once you file bankruptcy, existing auto loans typically stop reporting to credit bureaus. That means continuing to pay on an old loan may not help rebuild your credit—but a new loan will.
We’re Here to Help You Move Forward
Bankruptcy is a chapter—not your whole story. Whether you’re in an open case, recently discharged, or rebuilding your credit, Georgetown Auto Sales is here to help you get back on the road with confidence.
Apply for financing online or contact our team today to get started.
Frequently Asked Questions
Can I buy a car during Chapter 7 bankruptcy?
Yes. You do not need permission from a trustee or court to purchase a vehicle during an open Chapter 7 bankruptcy.
Do I need court approval during Chapter 13?
Yes. You must file a Motion to Incur Debt and receive an Authorization to Purchase before financing a vehicle.
How long does it take to get approval in Chapter 13?
The process can take anywhere from a couple of days to several weeks, depending on your court and trustee.
Will bankruptcy prevent me from getting approved?
No. Many lenders specialize in working with customers in bankruptcy situations.
Can I trade in my current vehicle during bankruptcy?
Yes. In many cases, existing auto loans can be surrendered without penalty during bankruptcy.
Does buying a car help rebuild credit?
Yes. A new auto loan will begin reporting to credit bureaus and can help rebuild your credit profile.
What documents do I need?
You’ll need identification, proof of income, proof of residence, and court authorization if applicable.
Can I buy before my bankruptcy is discharged?
Yes—and in many cases, it can be beneficial to do so.
Will I have a higher interest rate?
Rates vary based on your situation, but we work to secure the most competitive options available.
How do I get started?
Apply online or contact Georgetown Auto Sales to begin your financing process.