How to Buy a Car After Filing Chapter 7
- 1). Obtain a copy of your letter of discharge from your bankruptcy. Copies of a chapter 7 bankruptcy are often mailed directly to the bankruptcy attorney approximately 60 days after the debtor has met with a trustee. Lenders often want to verify that the chapter 7 bankruptcy has been discharged to help them confirm that you will be unable to include a new loan in an open chapter 7 bankruptcy case.
- 2). Request a free copy of your credit report from AnnualCreditReport.com and make sure all debts included with your bankruptcy are being reported correctly. After a chapter 7 bankruptcy, accounts are often reported as "closed," "current," or "discharged." If your creditors are still reporting debts as past due, this could lower your credit rating and affect your ability to qualify for a car loan. When any mistakes are found on a credit report, file a dispute with the three major credit bureaus by mail, including a copy of your bankruptcy discharge information.
Equifax
P.O. Box 740256
Atlanta, GA 30374
1-800-797-7033
TransUnion
P.O. Box 200
Chester, PA 19022
1-800-916-8800
Experian
P.O. Box 9595
Allen, TX 75013
1-800-583-4080 - 3). Contact potential lenders and discuss your situation prior to completing an application. Talking to a loan representative and applying on the phone or in person will often increase your chances of getting an approval. It will also reduce the number of hard inquiries, which can lower your credit score. If you do apply for financing online and receive a denial, do not be afraid to call the company's reconsideration department. Computer generated denials are often determined by credit scores. Calling and faxing verifying documents can sometimes lead to a manual approval.
- 4). Be prepared to be charged a higher than normal interest rate because of your recent chapter 7 bankruptcy filing. Whenever possible, avoid applying for financing directly at dealerships. They will sometimes add fees and finance charges to the cost of the vehicle. If you feel that your monthly car payment combined with monthly insurance costs will be more than you can afford, consider alternatives. Look into used or cheaper cars or consider paying a higher down payment to reduce monthly expenses.
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