Buying A Car And Bankruptcy

: Chris Lee Law Firm

  Filed under: Loans

carIf you are in need of a vehicle to take you to and from work there are some considerations you should make. One of those considerations is about your financial state. Do you make enough money to cover the payment each month? Are you experiencing financial hardship? What about bankruptcy, are you considering filing or recently filed? The answers to these questions are important for your future of getting an auto loan.

Before Bankruptcy

Buying a car before filing for bankruptcy could pose two problems. First, if you buy the car within the 6 months before filing this could be viewed as suspicious. The court is not fond of people racking up a ton of debt right before filing for bankruptcy protection. Your Dallas bankruptcy lawyer can better determine if this action may be detrimental to your case. Second, protecting a car through a state or federal exemption law may not cover the value of a new car. The federal exemption law only covers a vehicle up to $3,675. Any car above this value may have to be reaffirmed with the creditor in order for you to keep it.

After Bankruptcy

Buying a car after a debt discharge in bankruptcy is really only hampered by one thing; your credit. After your debts have been resolved in bankruptcy you are at a crossroads of credit recovery. Take the time to rebuild your credit score and reestablish yourself as a responsible borrower before taking out any new loans. This could take 6 months or more, but is worth the wait when you secure a loan with more favorable terms. If you need a vehicle sooner, look for a used car that you can buy with cash to sustain you until you are ready to purchase new.


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