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New Auto Loan during OPEN Ch7?

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beezer32
Regular Contributor

New Auto Loan during OPEN Ch7?

 

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?

Message 1 of 5
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MileHigh96
Frequent Contributor

Re: New Auto Loan during OPEN Ch7?

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):

Closed accounts:
Message 2 of 5
CH-7-Mission-Accomplished
Valued Contributor

Re: New Auto Loan during OPEN Ch7?


@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.

Message 3 of 5
FireMedic1
Community Leader
Mega Contributor

Re: New Auto Loan during OPEN Ch7?

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.


Message 4 of 5
beezer32
Regular Contributor

Re: New Auto Loan during OPEN Ch7?

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!

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