When you finish bankruptcy and your case is formally closed, you may feel like the weight of the world is off your shoulders. The debt relief you can receive during this process can help you regain control of your finances, giving you the chance you need to start over. As such, you may want your first major purchase after bankruptcy to be a car. This blog explores what you should know if you want to buy a car after bankruptcy, including whether or not this is possible and the importance of working with a Memphis, TN consumer bankrutpcy lawyer to help you discuss your legal options.
Is It Possible to Buy a Car After Finishing Bankruptcy?
When you file for bankruptcy, it’s important to understand that, while you will have some of your debt discharged, you will also experience a significant decrease in your credit score. This is because bankruptcy shows your inability to repay loans, which, in turn, makes it harder to find lenders to extend loans to you.
You should also note that if you have a recent bankruptcy filing on your credit report, you may be able to get a loan, though the terms will be unfavorable. You will likely pay an astronomical interest rate, as this serves as a sort of collateral for the lender in the event you fall behind or default on your payments.
However, if you are looking to buy a car during an ongoing bankruptcy filing, you’ll need to get permission from the court first. This is because it is a condition of bankruptcy to avoid taking on new debts during the process.
What Can I Do to Improve My Loan Terms?
If you are looking to purchase a car after your bankruptcy case has been discharged, the most important thing you can do to improve your chances is to wait as long as possible. The longer you wait, the more time you have to rebuild your credit, and the less impactful a filing will be on your credit score.
One of the most important things you can do to rebuild your credit score following a bankruptcy filing is to set a budget and stick to it. Unfortunately, once previous debt is discharged, many assume they can start spending again. However, spending outside of your budget can result in the debt cycle starting over again. As such, it’s imperative to ensure you set a realistic budget, making sure to include your estimated car payment in the budget.
Going through bankruptcy can be an incredibly overwhelming process, which is why working with an experienced bankruptcy attorney is in your best interest. At the Arnold Law Firm, we understand how difficult these matters can be to navigate, which is why we will do everything in our power to help you achieve the best possible outcome. When you need help, our team is here. Contact us today to learn more.
