New Auto Loan during OPEN Ch7?

beezer32 · ‎05-31-2023

My attorney expressly advised that I could open up a new auto loan during my active CH7 case, anytime after filing. He even recommened a couple of dealerships that specialize financing people in open CH7 bankruptcies. Does this even sound right to you? Does anyone have any experience doing this?

I've always understand that ZERO accounts should be opened prior to receiving a dischrage. Thoughts?

MileHigh96 · ‎05-31-2023

Personally, I would wait until the discharge and that all your accounts that were IIB are showing that fact. You should also get a slight score bump after the discharge because of all the prior debt no longer being valid. It's usually only around 8 weeks (give or take) between the 341 and when you receive the discharge so it's just better to wait and let everything settle from the BK.

Just my 2 cents.

BK7 discharged - 06JUL2021
Loans:

Revolving Accounts (in the order they were opened):

Ally Everyday Cash Back Mastercard (converted from Ollo Platinum Rewards Mastercard) $4800 CL (opened 7/21/21)

Mercury Mastercard $4360 CL (opened 7/23/21)

Upgrade Triple Cash Rewards Visa Card $17,500 LOC (opened 8/4/21)

PenFed Pathfinder Rewards $6000 CL (opened 11/9/21)

Dell Pay Credit (converted from Dell Financial Services account) $6500 CL (opened 12/6/21)

Capital One Kohls Visa (converted from Kohls store card) $3300 CL (opened 12/13/21)

Upgrade Cash Rewards Visa Card $7,000 LOC (opened 3/17/22)

Capital One Quicksilver MC (PC'd from a Platinum card) $3200 CL (opened 5/6/22)

Capital One Savor One MC $5000 CL (opened 10/20/22)

Merrick Bank Double Your Line MC $2500 CL (opened 11/1/22)

NFCU cashRewards Plus $28000 CL (opened 3/17/23)

Affinity FCU Pure Rewards Visa $1500 CL (opened 5/18/23)

Bread Cashback AmEx $10000 CL (opened 5/23/23)

Canvas CU Platinum Elite MC $3000 CL (opened 5/25/23)

NFCU Go Rewards Visa $23000 CL (opened 6/16/23)

Petco Pay Mastercard $5100 CL (opened 6/29/23)

My GM Rewards Card Mastercard $5500 CL (opened 8/1/23)

Denver Broncos Extra Point Visa $8500 CL (opened 12/8/23)

NFCU More Rewards AmEx $17000 CL (opened 2/8/24)

Ally Unlimited Cash Back Mastercard $3000 CL (opened 4/3/24)

Service Credit Union Everyday Visa $2500 CL (opened 8/19/24)

BECU Cash Back Visa $16000 CL (opened 8/21/24)

Closed accounts:

Mission Lane Visa - first starter card after discharge (opened 7/7/21 - closed 4/1/23)

Capital One Quicksilver MC (downgraded from a Walmart Rewards MC and transfered CL to older QS card) (opened 11/4/22 - closed 04/09/25)

Best Egg Visa (opened 05/17/22 - closed 04/14/25)

0/6, 0/12, 8/24 new accounts
TCL: $152.2K

CH-7-Mission-Accomplished · ‎06-01-2023

@beezer32 wrote:

My attorney expressly advised that I could open up a new auto loan during my active CH7 case, anytime after filing. He even recommened a couple of dealerships that specialize financing people in open CH7 bankruptcies. Does this even sound right to you? Does anyone have any experience doing this?

I've always understand that ZERO accounts should be opened prior to receiving a dischrage. Thoughts?

Of course your attorney is correct, you CAN open any kind of credit you want after filing; the question is should you? Before you are discharged, one or more creditors could object to your BK and if they prevail, the whole thing gets dismissed or turned into a Ch. 13. At the very least, I would wait until after the 341 hearing.

So you can get a new car right now, but it would be better to wait at least until discharge. And FFS, don't go out and buy a $70K truck or a luxury car just because you can get approved. Think about buying a five-year old reliable car like a certifiied pre-owed Toyota, Honda, or the like. When you're paying 24% interest, you should try to buy the least expensive car that will serve your needs for the next two years until you can again get current market rates from most lenders. Don't be a fool as you you start out on your new financial life without a dime in unnecessary debt.

FireMedic1 · ‎06-01-2023

Either way your interest isnt going to be great. Like @MileHigh96 posted. Once all is said and done. You'll get a score bump after DC. It could and I mean could mean really bad interest now before the score change. Or better afterwards with higher scores because your legally outy of debt. Filing is one thing. Do all accounts how $0 balance yet. Thats the deciding factor. Like @CH-7-Mission-Accomplished posted. Dont go nuts and get some new fancy car cause you filed BK. Seen it way too many times. When can I refinance. They went out over their heads and realize it afterwards.

beezer32 · ‎06-01-2023

LOVE the advice folks!

I certainly wouldn't get a vehicle above my means. Just something reliable for the moment, however I think I will wait until after DC. I do have a monthly payment budget and interest rate target goal I'd like to hit before shopping. I AM pretty desparate for a vehicle, however I think the best course of action is to hold off for DC and ensure $0 bals/iib remarks on CR before financing. Thanks again folks!