One thing we hear when clients come to us is a lot of concern about what happens after the bankruptcy is done.
People know, logically, their debts will be wiped out. They’ll be protected by the automatic stay.
They may even know there are certain kinds of property they do get to keep, and that there is no need to worry about losing everything.
But they imagine bankruptcy is the key to “ruining credit forever.”
Credit card companies certainly like to spread that myth around. They don’t want people declaring bankruptcy. They might not make as much money then.
In reality, your credit score tends to go up after bankruptcy. That’s what happens when there are no longer a dozen different collection items dragging your score down.
And you’ll probably start receiving car loan offers about a week after your discharge.
They won’t necessarily be the best offers. You’ll want to be careful, because some of the interest rates will be absolutely usurious. They may also require down payments and other concessions you may not be prepared to make.
But if you shop around a little, you can almost always find a loan you can live with and a car payment you can afford. There are a lot of bankruptcy-friendly lenders out there. And trades still take the place of down payments.
Of course, it’s important to be a little bit careful here for one other reason. You’re getting these offers because the car companies know it will be many years before you can file bankruptcy again.
The number of years depends on the type you file. At least two years after filing for a Chapter 13; eight years after a Chapter 7.
See also: What is Better, Chapter 7 or Chapter 13?
So these creditors feel reasonably sure they’ll get their money one way or the other. Either you’ll pay, or they’ll repo the car and charge you a deficiency balance when they can’t sell it for what you owe on it.
If you can, it’s better to drive your older car for awhile and to save as much as possible towards getting a new one, perhaps even in cash. But realistically, this is not an option for everyone.
But despite the unscrupulousness of some companies, you will have options. Lots of them.
There’s no reason to fear, and every reason to take advantage of this legal remedy today.
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