After filing for bankruptcy, you can expect to put in some work repairing your finances. You’ll need to live on a strict budget for a while, but this doesn’t mean that it will take years to qualify for a line of credit. In fact, you can likely qualify for a vehicle loan much more quickly than you might think. Talk to your bankruptcy lawyer about the recovery process after discharging your debts.
Repair Your Credit
Bankruptcy significantly lowers your credit score and your bankruptcy discharge will stay on your credit report for quite some time. However, the good news is that you can start rebuilding your credit right away. Simply making all of your payments on time will help demonstrate your credit worthiness. After a few months, you may qualify for a secured credit card, which should raise your credit score.
Save a Down Payment
While you’re repairing your credit, you should start saving for a down payment for your replacement vehicle. Lenders will be more likely to offer you a car loan after bankruptcy if you have a substantial down payment. Remember that, after a bankruptcy, it’s also crucial to begin establishing an emergency fund. Avoid using your emergency fund for your down payment; this could put you in a difficult financial situation later on.
Shop Around for Loans
Avoid selecting the first lender who offers you a car loan; this might not be the best deal you can get. Do a little comparison shopping online, call the financing departments of car dealerships, and contact your local credit union to find the most favorable terms for your car loan.
Choose a Reasonable Vehicle
It should go without saying, but living on a budget after filing for bankruptcy doesn’t generally lend itself to purchasing a new, pricey vehicle. Choose an affordable, but reliable vehicle from a used car dealer or private seller. Make sure that the car you choose gets good gas mileage and does not require a great deal of expensive repairs.
Here at Cutler & Associates, Ltd., our bankruptcy team is committed to helping our clients secure their financial futures through a debt discharge. Our bankruptcy attorneys will carefully explain what you can expect from life after bankruptcy.