Robert J. Adams and Associates
Can I Buy a Car After I File Chapter 7 Bankruptcy
CAN I GET AN AUTO LOAN AFTER I FILE CHAPTER 7 BANKRUPTCY?
To the first question: Yes. You can buy a car even on the date you file Chapter 7.
About the second question: Yes, you can get a car loan after filing Chapter 7.
But, you have to be realistic. You have to show a lender that you can repay the loan back.
The purpose of Chapter 7 is to get rid of debts. You are not paying old creditors. You now have money in your pocket.
My personal advice is to look for a modest car. Your next car should suit your purposes, not build your ego. You need a car to go to work and to run every day errands. You don’t need a car to impress your friends.
Can I buy a car for cash?
While you can, you should wait until after the Chapter 7 trustee’s meeting. In Illinois, you only have a $4,000 exemption in personal property. Not much of a car you can buy for under $4,000.
After filing Chapter 7, you might be able to save enough money to buy an inexpensive car in a few months. Or, you have enough for a down payment.
What if a relative is willing to buy a car for me?
That’s OK. You should wait until the case is actually filed. You may have to show that the money came from them.
What about an auto loan?
You are free to borrow money the very day you file Chapter 7.
You have to show the auto lender that you can repay the loan. Any dealings are between you and the potential finance company.
BE CAREFUL; BE VERY CAREFUL
There are unscrupulous car salespersons. They will try to sell a “junk” car at a high price with high interest rates.
Many lawyers have dealers who sell cars to Chapter 7 clients. These dealers have decent used vehicles at reasonable terms. I know our firm has a couple of places we refer clients.
Your future credit score
When you buy a decent used car with payments you can afford, your credit score will steadily go up.
WHAT ABOUT THE CAR I HAVE?
In another article which can be found at:
I explain the four (4) options you have when you file Chapter 7 and have a car loan.
One of the options includes getting a replacement car. Some of our clients give up their current car and car loan and get a replacement automobile. Again, buy a modest car and show you can repay the new car loan.