Moving forward after Chp 7

Anonymous · ‎05-31-2018

Hi all,

I recently filed for chapter 7 and pending the trustee meeting in 3 weeks.

I've stumbled across this site and have (https://ficoforums.myfico.com/t5/Bankruptcy/HOW-TO-From-BK7-discharge-to-700-in-24-months-or-less/td...) bookmarked as to what to do after the discharge.

My question/concern is that I will be without a car as it's being filed in the bankruptcy. Long story short: I bought it at a buy here pay here lot and will be upside down if I keep it so filing it. I purchased a cheap truck through my place of employment to potentially use as a trade but it's in terrible condition. Moving forward: My question is what to expect after the discharge (how hard it will be to get financed, etc.) with the trade in and maybe $500-$1,000 down.

I've called a couple of dealerships and talked to the people in finance but I was curious if anybody on this thread have any experience or advice to give out when it comes to a huge purchase so soon after discharge.

Thank you!

Anonymous · ‎05-31-2018

Your interest rate will be terrible post discharge. What you want to do here is figure out anything you can do to put off financing another car for about 6 months. (Longer is even better.)

Drive the cheap truck or something else you can pick up for cash now. Work on your rebuild following the steps in the link, and around 6 months post discharge you can get a decent rate on a vehicle. (You can probably refinance it for an even BETTER rate 6 months after that.)

Beware of the "oh, I'll just take this 24% car loan now and refinance later trap." High interest rates keep you underwater and the only way you're going to be able to refinance down the road is if you have the lump of cash to throw at the loan to even out the balance vs. the vehicle's worth.

nykos5000 · ‎05-31-2018

@Anonymous wrote:
Hi all,
I recently filed for chapter 7 and pending the trustee meeting in 3 weeks.

I've stumbled across this site and have (https://ficoforums.myfico.com/t5/Bankruptcy/HOW-TO-From-BK7-discharge-to-700-in-24-months-or-less/td-p/1384075) bookmarked as to what to do after the discharge.

My question/concern is that I will be without a car as it's being filed in the bankruptcy. Long story short: I bought it at a buy here pay here lot and will be upside down if I keep it so filing it. I purchased a cheap truck through my place of employment to potentially use as a trade but it's in terrible condition. Moving forward: My question is what to expect after the discharge (how hard it will be to get financed, etc.) with the trade in and maybe $500-$1,000 down.

I've called a couple of dealerships and talked to the people in finance but I was curious if anybody on this thread have any experience or advice to give out when it comes to a huge purchase so soon after discharge.

Thank you!

As mentioned, you will be able to get financing post BK but you will be facing 10-24% in interest depending on your credit profile pre BK and job, income, down payment, etc post BK. I financed a used car the day after I was discharged because I gave both of my cars up in the BK with a high 17% interest rate. YMMV depending on where you go for a car and your credit profile but definitely will be able to get financed. Check out a thread I started based on this topic:

https://ficoforums.myfico.com/t5/Bankruptcy/Bankruptcy-Friendly-Auto-Loans-Guide/td-p/5100765

BK7 08/2016 | DC 12/2016

Anonymous · ‎06-01-2018

@Anonymous wrote:
Beware of the "oh, I'll just take this 24% car loan now and refinance later trap." High interest rates keep you underwater and the only way you're going to be able to refinance down the road is if you have the lump of cash to throw at the loan to even out the balance vs. the vehicle's worth.

Very true! Better to drive what you have for as long as you can. Remember too that without a significant downpayment, not only will your interest rate be high, but you will immediately be upside down on your new car. Always look at the value of your car as if it were going to auction, that's what dealers will normally pay, not KBB or similar.

texamel · ‎06-02-2018

I got a new car least about 6 months before I filed Chapter 7. Kept the car, but once the discharge was issued, a day doesn't go by that I don't receive a letter in the mail from some dealership telling me I'm approved for a 30,000 + loan. They see that you have no debt, and can't file bankruptcy so you are really a better risk than most. And you will be surprised that once the discharge is recorded your FICO scores go up. That was the biggest surprise to me. Just hang in there, it will get better. Right now is the worst part. But save the money you were paying on your debts and use that for a down payment when you're ready for a newer car.