Understanding Bankruptcy in Albuquerque, NM

Filing for bankruptcy can feel like you won't be able to get approved for anything else ever again -which is not true. Bankruptcy can be a fresh start to stability to rebuild your credit. When leasing or financing, a credit score is a very important aspect. While making on-time payments, this can build your score up in no time. If you have filed for Chapter 7 or 13 and still in the process of doing so, our team will do whatever they can to personally work with you to get up and running again.


Open Bankruptcy Auto Loans

 After you have filed your bankruptcy papers with the court, your bankruptcy is now considered open. It will remain that way until you receive your discharge papers from the judge. Open bankruptcy auto loans may be made available during this time with both Chapter 7 and Chapter 13 bankruptcies, but with different requirements.


Chapter 7

A Chapter 7 bankruptcy is open for approximately three to four months making the process a little faster. Before you can apply for an auto loan through any bad credit lender, you must make sure that your meeting of creditors has taken place. Legally, this is called the 341 meeting and allows the creditors listed on your BK papers to ask you questions about your debts. Lenders wait for this meeting to be completed before offering financing to debtors because:

-After this meeting, you can no longer add debts to your bankruptcy petition, and the new car loan will not be discharged in the bankruptcy process.

-Should your case be dismissed by your bankruptcy judge for any reason, you are still liable for the balance of the loan.

-Your creditors have agreed to the terms of the bankruptcy and your debts will be extinguished, lowering your debt to income ratio.

After you have proof of completion, you can then apply for an online pre-approval at Larry H Miller American Toyota, NM. Keep in mind, however, that because a Chapter 7 bankruptcy happens so quickly, your loan approval chances will significantly improve if you delay applying until you have your discharge papers.


Chapter 13

If you've filed for Chapter 13, you have a little more leeway when it comes to auto loans during bankruptcy. The process is much longer, lasting three or five years. The court appointed trustee will set up a payment plan based on your income, and you will repay a portion of your debts over the life of the bankruptcy. If you plan to apply for financing of any kind during this time, you must get approval through your trustee. Compile a list of reasons as to why you need a new vehicle to present to the court. For example:

  • More than one person in the house has a job, so you need two cars.
  • One person works while the other drives kids to school or extra-curricular activities.
  • You have one car that is about to die, and you need a reliable vehicle for the family.

 Once you have compiled your list, you must then file it with your trustee. This is called a Motion to Incur Additional Debt. Then you may have to answer questions about the vehicle you want to purchase. There could be stipulations added to the loan terms, including how long the loan is, what your interest rate can be, and what your monthly payment must be. If your motion is accepted, you will receive an Authorization to Incur Additional Debt. Once you are authorized, you can proceed with your purchase.

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