Bankruptcy Car Loans - What You Need To Know

Bankruptcy is a big step that should never be undertaken lightly. Perhaps you have recently been through bankruptcy or are considering filing for bankruptcy. The type of bankruptcy protection that you filed for or will file for will make a big difference in the speed with which you will be able to rebuild your credit file and qualify for loans, such as those needed to purchase a car, truck, or SUV.

Chapter 7 Or Chapter 13? It Matters When Considering A Bankruptcy Car Loan

While every bankruptcy is unique, most bankruptcies fall under two categories - Chapter 7 or Chapter 13. Under a Chapter 7 bankruptcy proceeding, your property is sold and the proceeds of your property are divided among the creditors or lenders that you chose to include in your bankruptcy (other than student loans or other government obligations that you owe).

Once your creditors have received their share of the proceeds from the property that is sold during Chapter 7 bankruptcy, your creditors can no longer collect on the debt that you owe them. This debt is referred to as discharged debt. Chapter 13 bankruptcy allows a borrower to restructure their debts by working with a trustee who forms a payment plan that is paid over a period of five years.

Whether or not you will qualify for a bankruptcy auto loan will depend upon which chapter of bankruptcy that you filed. Those who have filed Chapter 7 bankruptcies should have no trouble qualifying for this type of loan; those who have filed Chapter 13 bankruptcies, on the other hand, will have to meet with their trustee and be approved to take out a loan according to the budget and the repayment plan that has been set up through the court for their debts.

Put Yourself Behind The Wheel With A Bankruptcy Car Loan

If you have had your debts discharged under a Chapter 7 bankruptcy proceeding, you are in good shape to apply for and be approved for a bankruptcy car loan. You have a new appeal to certain lenders because you are now debt-free, regardless of how you got there. Lenders know that you cannot file another bankruptcy proceeding for a specific number of years, and this makes them more willing to trust that you will honor the terms of your bankruptcy car loan.

The basic requirement to receive a bankruptcy car loan for those borrowers who are fresh out of Chapter 7 bankruptcy is that the borrower can demonstrate that they have an income that is adequate enough to meet the loan requirements and the monthly payment. It helps to improve your chances of getting the best terms on your bankruptcy car loan if you provide a down payment of some sort; even a small down payment such as $1,000 or $1,500 can reduce the rate of interest that you pay, saving you money over the course of your loan.

For borrowers who are restricted to the Chapter 13 bankruptcy guidelines in order to apply for credit of any kind, getting a bankruptcy car loan is still possible if they can demonstrate that they can make the monthly payments on the car.

Hard Money Loans Help Avoid Bankruptcy

When being bogged down by a mountain of unpaid debt, it can oftentimes feel as if bankruptcy is the final and only available option to regain your financial security. But many people are reckless in filing bankruptcy, taking it as an easy way out. Bankruptcy is a serious action, the results of which can stay attached to your credit file for an entire ten years in some cases, haunting you as you attempt to get the loans that you need, rent an apartment, buy a house, or even obtain insurance at a reasonable rate.

And since more and more potential employers now check the credit record of their prospective employees, a bankruptcy notation on your credit file can even lower your chances of getting the dream job that you have been working so hard for. For this plethora of good reasons, smart borrowers are turning to consolidation of their debts via private party loans in lieu of the drastic measures of bankruptcy.

What Are Hard Money Loans?

Hard money loans are loans that are made using the funds of private lenders, and many borrowers are having an easier and more hassle free time securing loans for consolidation of unpaid debt than other more traditional options. Being approved for this type of loan is easier than traditional loan products because approval is based more upon assets than on credit history.

Private lenders are not held to the strict lending and underwriting practices that govern bank lending, and this allows them the freedom to loan money to a greater number of borrowers, even those with bad credit.

Advantages Of Hard Money Loans

Hard money loans can allow you some relief from your debt much faster than a conventional loan can. Although every borrower is different, those borrowers who take advantage of these loans can find themselves free of debt with a few years; traditional debt consolidation can take a decade or longer. This is due in large part to the deflated rate of interest that is found in hard money lending, which puts your debt at a more manageable level and allows you to pay more of the total principle that is owed on your debt each month.

Hard money loans are better for your credit than bankruptcy, obviously, but perhaps even better than loan consolidation with a typical lender. Why, you may ask? Simply put, many of the debt consolidation companies out there only worsen the situation that borrowers are facing. Hard money loans allow you to build positive payment history by actually paying off the debt you owe faster, without falling behind.

Before you take a hard look at bankruptcy, consider a hard money loan. Bankruptcy can leave a stigma on your credit record that takes a big part of your lifetime to overcome. Bankruptcy demonstrates in one of the harshest ways possible that you are more than willing to walk away from your debt, and your responsibilities. Hard money loans can give you freedom over your finances once and for all, while avoiding bankruptcy.