Recently on our forum a father asked, “My daughter has asked me to cosign on a loan for her to buy a car. I love her, but I don’t want to be on the hook if she is unable to pay. Is it ever a good idea to cosign on a loan?”
Recently on our bankruptcy forum a user asked, “I am considering filing for Chapter 7 bankruptcy. I have a 2012 car with a $24,000 car loan. My wife has a car with a car loan of about $12,000. What are our options for the cars if we do decide to file for bankruptcy protection? I know we can always ride the bus, but we’d like to keep one car if possible.”
Recently on our legal forum a user asked, “I had a severe back condition, COPD, and depression for several years. I attempted to go back to work. I somehow generated about $10,000 in a disability overpayment. I tried to get the SSDI to waive the disability overpayment charges but was unsuccessful. My husband has also lost his job and we have about $30,000 of credit card debt. Can a bankruptcy discharge my disability overpayment?”
Recently on our bankruptcy forum a user asked, “I have lost my job, I have $50,000 in credit card debt and high medical bills. I live in the State of Texas. I know Texas likes to do things differently than the rest of the country. Is this true in bankruptcy? How will my Texas bankruptcy differ from bankruptcies filed in other parts of the country?”
Recently on our bankruptcy forum a user asked, “I am about to go to college. I read that up to 60% of students in the U.S. are now borrowing money to pay for college. If I do decide to take out a college loan what do I need to know before I do it?”
Asking questions about whether or not you need to borrow money for college is a great first step to ensuring you don’t make the same mistakes that so many students make. Unfortunately, experts estimate that college loan debt is likely to become the next crisis, most likely surpassing the housing crisis of 2008.
Recently on our bankruptcy forum a user asked, “I owe a credit card company $20,000. I think my debt has been sold to a debt collection company. The calls and debt collection efforts are relentless and have become harassing. Do I have any rights? How can I get this to stop?”
Unfortunately, there are a number of life circumstances, such as divorce, death, disability, that can cause financial devastation and may make it impossible for you to repay debts. It’s likely that if you fail to repay your debts, however, at some point the creditor may sell that debt to a third-party debt collector. If that happens, you can expect to receive letters and phones calls, some which may be harassing, as the creditor attempts to collect the debt.
Although the economy has improved in the last few years, there are still millions of Americans facing unemployment and high credit card debt. Recently on our bankruptcy forum a user asked, “I have been unemployed for six months. I have spent my emergency savings, and I am living off my credit cards. If I decide to file for bankruptcy protection should I keep making credit card payments or should I focus on paying my mortgage bills and keeping my home?”
Recently on our bankruptcy forum a user asked, “I am planning on filing Chapter 7 bankruptcy. I have recently come into a bit of money, and I would like to repay my father for a loan that he gave me. Is this allowed? What do I need to consider before I repay my dad? What are preferential payments?”
Recently on our bankruptcy forum a user asked, “I filed bankruptcy two years ago, at which time my car was repossessed and sold. I was wondering what steps I need to take if I want to buy another car within the next year or two. I have been taking the bus to work, but I do not want to do this forever.”
Buying a car after bankruptcy
It’s amazing, but almost anyone can get a car loan, even debtors who have recently filed for bankruptcy. Unfortunately, getting a car loan with reasonable interest rates after a bankruptcy is more difficult. For this reason, most financial experts will tell you it’s much better to wait awhile to purchase a car.
In fact, if you decide to wait a requisite amount of time and rebuild your credit before buying your car, you will have a good chance of avoiding lenders who specialize in “bad credit,” and instead, find a lender who can offer you a good interest rate and a more affordable car.
What steps should you take before buying a car?
- Rebuild your credit
Rebuilding your credit is the first step before buying a car or making any other type of large purchase. Rebuilding your credit can start as soon as you file bankruptcy. Start by paying all of your bills on time and in full, and obtaining a secured credit card and repaying it promptly, thus proving that you are now credit worthy.
- Save some money for the down payment
Next, in order to avoid having to finance a large percentage of the car price, start saving the money for the down payment. Consider saving $5,000 or $10,000 and financing the rest.
- Purchase a car you can afford
Before buying a car it’s important to make a budget. Make sure you know your income and your monthly expenses. Be realistic about the type of car you can afford. Can you get the latest Corvette? Probably not, but if you start saving now you may be able to find a very nice car.
The worst thing you can do is to make a car purchase that you cannot afford and risk losing another car through repossession.
- Research rebates offered by manufacturers before buying a car
Manufacturers offer a variety of different incentives to move cars off of their lots. Some are advertised; many are not. Talk to the dealers and find the best offers.
- Review your credit report
Finally, before buying a car, you will want to take a look at your credit report. Make sure all of the entries are valid. If there are errors make sure you take the right steps to have them removed. Additionally, there are instances when you may be able to get the repossession deleted from your credit report (i.e., if the repossession can’t be verified it must be deleted from your credit report).
You probably will not have difficulty purchasing a car after filing for bankruptcy. You may, however, have to wait awhile and take some steps to ensure your credit has improved and you are in a better position to make a smart financial decision.