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Where can I get a Car Loan DURING Chap. 7 BK?

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Officer737
Established Contributor

Re: Where can I get a Car Loan DURING Chap. 7 BK?

My state permits seeking new credit prior to discharge of a Ch 7 bk. The trsutee frowns upon it but they permit. But the trustee can deny other parts of your bk discharge based off of obraining that new credit. 

Message 21 of 27
SoulMaster
Established Contributor

Re: Where can I get a Car Loan DURING Chap. 7 BK?

It looks like the OP decided to wait until post-discharge to try and get their new loan.  While I don't necessarily agree with anyone ever borrowing money for a car, this is the best decision.  There are 2 specific reasons for this that weren't brought up in the responses OP got.

 

1.  Trustees are human, and boy to they get ticked off fast.

 

In states that don't specifically prohibit "acquiring new obligations" prior to discharge, there is always a chance that the Trustee finds out about it.  This is an incredibly bad thing.  Not because they can necessarily recommend dismissal, but because they can literally crawl up your butt with a microscope.  What most people don't understand is that Trustees get paid a percentage of all assets they recover/sell for the creditors.  In general, they'll leave most cases (that are filed by upstanding attorneys) alone, because the attorney does a cursory debtor's exam.  However, when some Trustees hear that their petitioner is applying for new credit prior to discharge; they take it upon themselves to "teach the debtor a lesson".  A full-on debtor's exam can be requested (which is a court thing) and if granted, your life sucks for at least a year... also, your BK retainer probably has a special clause about this, so it's going to cost you more.

 

You'll not that in one of the replies the poster said that his/her attorney advised that they shouldn't apply until AFTER the 341.  This is because Trustees often ask "Have you applied/obtained for any new credit since your petition?".  If you have and they ask it's going to open up a huge nightmare for the attorney. (Yes = debtor's exam, No = perjury).   From time to time trustees will find new obligations after a 341, too.  (social media / forum / blog posts make it REALLY easy).  So, most attorneys will say "Don't apply for anything until you get your discharge", regardless of the state's specific laws.

 

#2.  A BK is a "reset" button for your credit report; and analysts/computers REALLY hate seeing new TLs opened (or even inquiries) between petition and discharge.  

 

A new TL/Inquiry prior to discharge means only one thing (to an analyst), that the debtor hasn't learned the "patience" or "don't buy what you can't afford to pay cash for" parts of the credit counseling we all go through in BK.  In other words, applying for (or getting) credit between petition and discharge is a sure-fire way to really screw up a rebuild.  Remember, FICO 700 (+/-) @ 2 years post discharge isn't just possible... it's now the norm.  If you aren't at least at a 680 in 24 months, you did something wrong.

 

Cheers,

 

-SM

 

 

 

I am not an attorney and none of what I write should be construed as legal advice. For legal advice please consult an attorney.

Starting Score: ~470 preBK(8/2010)
Current Scores as of Late January 2016 All 700+. Last CR pull from a lender(housing) was mid-score 749.
Goal Score: 700+ - reached.
Message 22 of 27
aLottaGoodEggs
New Member

Re: Where can I get a Car Loan DURING Chap. 7 BK?

Well, I applied to Prestige today and I'm waiting for an answer.  To those that used Prestige:  Do they make you use a certain car dealer or can you use whoever you want?  I found an awesome deal on a particular vehicle, that's why I ask.

Message 23 of 27
aLottaGoodEggs
New Member

Re: Where can I get a Car Loan DURING Chap. 7 BK?

Well, I just got an email response from Prestige:

 

Unfortunately Prestige Financial does not have a lending program to provide you at this time.  Please know that we have carefully reviewed the information you provided on your application.  You will receive a letter from our office within the next 30 days containing additional information as to why.

 

WTH?!  I am surprised, from what I understand they finance anyone .

Message 24 of 27
kd081708
Regular Contributor

Re: Where can I get a Car Loan DURING Chap. 7 BK?

I used 721 redemption which ended up being Prestige. Message me and I will give you all of the specifics. :-)


Starting Score: EQ 450 EX 498 TU 470
Current Score:
EQ 574 EX 581 TU 572 Barclay 596 Merrick 612
Goal Score:
600 all by 06/30/2014


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Message 25 of 27
LieslMet
Member

Re: Where can I get a Car Loan DURING Chap. 7 BK?


@StartingOver10 wrote:
Each to their own. But it is a difficult way to turn over a new leaf if you are going to jump out and start paying on a high interest newly acquired loan for a vehicle during your BK. It truly defeats the entire purpose of "starting over".

Normally, I would agree with you. But as a one-car family, it was essential that we have a vehicle. The stay was going to be lifted any time after the 341 meeting. My husband could not make money if he couldn't get to work. And being only a few months at his new job - after a year and a half of being unemployed - it would be madness to risk that employment. To wake up one morning and find no vehicle in the driveway, a few hours before he has to be at work? That was, in no way, a feasible option.

Only a high-interest loan was available and we could either have had a loan for a crappy car for twice its value (and pay for constant repairs/maintenance) or pay a NADA price for a more recent used vehicle with a 5-year warranty. A few weeks after filing, my husband was promoted and began making more than double his starting pay. So we knew we could make double payments. And have been. Doubling up, it would have been paid off in Feb 2015 (from a start of mid-April '13) but we're accelerating even more, starting in March. It will be paid off no later than August 1st. And my husband's scores, with the addition of a $300 limit card (Cap 1) in November, is in the mid-high 600s. As of Feb. 22nd, they're 663, 672, 694. That's just under one year post Ch7 filing. I can't help but deduce the auto loan has something to do with it... he has one loan of 10 months and one CC of 3 months. 

 

So no... if the OP can afford it (and with ZERO other debt payments, it's likely), I certainly don't see a high interest rate as the end of the world. Budget for acceleraton and snowball it with all your might. Instead of $7,700 in interest over the life of the loan, we'll have paid $1900. 

Message 26 of 27
cliccmade
Contributor

Re: Where can I get a Car Loan DURING Chap. 7 BK?

a lot of bad review on the internet about that company

CH 7 filed 2/24/14 TU 572
Discharged date: 6/06/14
$500 Secured USBank Platinum
$700 First Premier Bank
$2000 Merrick Bank
$1300 Fingerhut
Goal 620 by 12/1/2020
Message 27 of 27
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