By: Darrell Castle
Hi, I’m Darrell Castle and I’m an attorney licensed to practice law in the state of Tennessee. And the answer is YES, absolutely you can finance a car after you’ve done a Chapter 7.
Here’s how you go about it.
When you file a Chapter 7 bankruptcy, it’s going to take about three to four months to be completely finished. But about 30 days after you file, you’re going to have a meeting. And that’s called a “341 meeting.” It’s a very brief meeting in court that’s conducted by a trustee.
And after that meeting, what you should do is start looking for a lender. You should start trying to set the whole thing up because you’ll have about 3 months to do that. You cannot make this deal until AFTER your discharge, which will be about 90 days after your 341 meeting. So you’ll have about 90 days to get everything in order.
You should go online and do this. Go online and shop for people who are experienced in lending to Chapter 7 discharged people. There are plenty of them out there.
A good site to look at is called Cars Direct — carsdirect.com. That’s just one of many. And it’s not an endorsement from me. I think Cars Direct is the biggest one. But they are very experienced in connecting buyers who’ve done a bankruptcy with lenders who are experienced in lending to those people.
You get it set up like that so by the time your discharge is complete, you can make the deal.
Now, here’s some other things to keep in mind.
You can negotiate the interest rate. Everything is negotiable including the interest rate. Be prepared to pay a little more. Interest rates are set and charged according to risks. And they’re entitled to charge you a little bit more. But not an unreasonable amount. Don’t accept any 30-40% deals. You don’t have to do that.
Here are some other things to think about. Be reasonable in your approach to cars. You’re not going to be able to finance a $50,000 or $60,000 car immediately after discharge. You couldn’t afford it anyway most likely. And if you could then you shouldn’t be in a Chapter 7. So restrict yourself to less. Be prepared to finance $15,000 or less. That’s a general rule.
Finally, be prepared to pay something down. Make a down payment. 20% is pretty reasonable. So, you get that car financed and maybe years down the road you can get that $50,000 or $60,000 car when things turn around for you.
The last thing I’ll tell you is to get yourself in a good program to rebuild your credit score. A program like 7 Steps to a 720. We offer that program for free to our clients. It’s an excellent program to raise your credit score so you can buy the things you want and the things you can afford.
Want a free case evaluation?
If you’re struggling financially and want to talk to someone about your options, then our free bankruptcy consultation is perfect for you! Call (901) 327-2100 to schedule it today!