How Reaffirmation Affects Bankruptcy Car Loans

Filing for bankruptcy can be a confusing process for first-timers, which is why we always recommend working with a qualified bankruptcy attorney if you want get a fresh start and regain control of your financial life. One thing people often don’t understand about bankruptcy is what reaffirmation means. In this article we’ll explain what you need to know about reaffirmation, as well as how reaffirmation affects bankruptcy car loans when you need to replace your car with an open bankruptcy case.

What is Reaffirmation During a Bankruptcy?

When you file for either a Chapter 7 or Chapter 13 bankruptcy, one of the things you have to do is decide which debts are going to be included in the bankruptcy filing and which ones will not be included. Typically, you’ll be including most or all of your unsecured debts (credit cards, personal loans, etc.). But there are some things you own and are making payments on that you need to keep – like your car. If you want to keep your vehicle in bankruptcy, the way you do it is to enter into a reaffirmation agreement with the lender. The reaffirmation agreement means you’re committed to keeping up your payments on your car loan and will not include that debt in the bankruptcy. After all, you still need a vehicle to get around, right? You should only enter into reaffirmation agreements on debts that are for things you really need to keep – and make sure you can afford to keep up the payments and make those payments on time. Also keep in mind that when you sign a reaffirmation on a car loan, the lender may not report your loan payments to the credit bureaus while the agreement is in place, essentially forcing you into several more years of payments to pay off the car, but without those payments helping to improve your credit score.

Check to See if Your Car is Exempt from Bankruptcy

Depending on how much real equity you have in your car, it might fall into the exempt property category in California. If your car is exempt, then you get to keep it during bankruptcy without going through the reaffirmation process. In California, you get to choose between two different exemption schemes. Your bankruptcy attorney can help you figure out which one is best for you depending on all the different kinds of property you own. But when it comes to your car, here’s what the two different schemes consider exempt: In System 1 (704) up to $3,050 in car equity is exempt and in System 2 (703) up to $5,350 in car equity is exempt. These figures are updated every three years. Since these are the figures from 2016, new figures will be in April of 2019 to account for changes in the cost of living.

Your equity in the car is the difference between what you owe on the loan and what the car is worth. If you owe more on the loan than the car is worth (meaning you’re “upside down” or “underwater” on the loan), then you have no equity in the car and it cannot be exempted from the bankruptcy. If you want to keep that car, you’d want to enter into a reaffirmation agreement on that debt. But, if you have a car that’s worth $10,000 and you only owe $7,000 on it, then you have $3,000 of real equity in the vehicle, which falls under the threshold of both exemption systems. This means your ownership of the vehicle is protected from creditors during bankruptcy as long as you keep making your payments on time.

Note that if you choose System 2 (703), there is an additional “wildcard” exemption of $1,425 that can be applied to any property you want. Let’s say you have that same car mentioned before that’s worth $10,000 but now you owe only $3,500 on the loan. You have equity of $6,500 in the car, but the vehicle exemption is only protecting $5,350 of that equity. What about the other $1,150 of equity you want to protect? If you want to have it all exempted, you could take $1,150 of your wildcard exemption and apply it to the vehicle so all of your equity is protected from the bankruptcy.

Does Reaffirmation Affect Bankruptcy Car Loans?

It’s important to make sure you understand one aspect of reaffirmation that a lot of people get wrong. Many people think that if they sign a reaffirmation on their car loan, they are somehow “locked-in” on that loan and have to ride it out to the bitter end. Not true! You are totally free to sell that car and get another vehicle if that’s what you need to do, but you need to be careful.

What you need to pay special attention to is whether you have positive or negative equity in the vehicle. If you’ve signed a reaffirmation agreement, some lenders require you to first cover all or at least half of the balance before they will offer you a new loan, and even then the terms may not be very good. If you have positive equity in the car, you should have no problem getting the bankruptcy loan you need, as long as you meet the other eligibility requirements. You can use the positive equity as a down payment towards your next loan. You can also cancel a reaffirmation agreement and then apply for a bankruptcy car loan through a fresh start lending program. The window for canceling a reaffirmation agreement is either before your bankruptcy is discharged or within 60 days of when you the reaffirmation agreement was filed with the court (whichever date is later). If you’re past both those dates and want to cancel a reaffirmation agreement, enlist the help of an attorney.

For example, let’s say you signed a reaffirmation agreement on your car loan. By doing so, you committed to keep making your payments on the car loan. But what if you realize keeping up the payments is going to be harder than you thought? Or what if your family is growing and you need a bigger vehicle? Having positive equity in your current vehicle is the best way to ensure you can get a new loan to buy your next car, but even then there is no guarantee. You’ve been making your loan payments and thinking your credit is improving, but if the lender has not been reporting those payments to the credit bureaus, your credit score might be worse than it was before the bankruptcy! And, as mentioned earlier, if you have negative equity in the car, a lender could require you to cover 50% to 100% of the balance of the loan before they will consider giving you a new loan with better terms.

As you can see, this aspect of bankruptcy that’s about property exemptions and reaffirmation agreements can become complex if you have a lot of different kinds of property. You have to figure out which of the two different California exemption schemes is the right one for you, and then also determine if you should do a reaffirmation on your current car loan. This is why Day One recommends you work with one of the bankruptcy attorneys we know will treat you right . And if you need to replace your current vehicle after filing bankruptcy, Day One is your best choice for bankruptcy car loans. Our process is fast and gets incredible results for you. Contact us for more information or start our online application now!

Filing for bankruptcy can be a confusing process for first-timers, which is why we always recommend working with a qualified bankruptcy attorney if you want get a fresh start and regain control of your financial life. One thing people often don’t understand about bankruptcy is what reaffirmation means. In this article we’ll explain what you … Continue reading “How Reaffirmation Affects Bankruptcy Car Loans”

10 Bankruptcy Car Buying Mistakes to Avoid

bankruptcy car buying mistakes

When you realize that the mountain of debt you’re facing for whatever reason is way more than you’ll ever be able to handle, filing for bankruptcy offers you a way out. In a Chapter 13 bankruptcy, you’ll work with an attorney and the bankruptcy court to come up with a reasonable payment plan that will get your debts back under control – something that can take anywhere from 3-5 years to achieve. In a Chapter 7 bankruptcy, all your worst debts are completely eliminated, leaving you with only those you need to maintain (such as your house, car, and student loans). The decision to file and the process of filing for bankruptcy causes a lot of stress for most people going through it. If they discover they need to replace their car, the added stress causes many people to make one or more of the 10 bankruptcy car buying mistakes. This article explains each one, and how you can avoid all of them.

1. Paying Cash for a Car

paying cash for a car

People with fantastic credit who can pay for a car in cash should always feel free to do so and avoid all the interest payments of a financed purchase. But if you in a bankruptcy situation, paying cash for a car is one of the worst bankruptcy car buying mistakes you can make. Why? Because one of your primary goals in filing bankruptcy is to start rebuilding your credit history and increase your credit score.

What the credit bureaus are looking for is how you now handle new lines of credit. If you pay cash for a car, nothing gets reported to the credit bureaus, which means you won’t gain any credit-improving benefits! One of the fastest ways to start restoring your credit is by financing the purchase of a vehicle and making on-time payments, each of which will be reported to the credit bureaus.

Although the costs of the loan mean you’ll end up paying more than you would with cash, it’s worth it in order to improve your credit score. You’ll end up having more credit options available to you for other kinds of loans like a mortgage to buy a house, a home equity loan to make improvements to your house, and qualify for better credit cards. Can you afford to miss out on all those benefits? Day One Credit has a strong network of lenders who specialize in serving bankruptcy customers, whether it’s a Chapter 7, a Chapter 13, or a recently discharged bankruptcy.

2. Buying from a BHPH Dealer

buy here pay here

What is a BHPH dealer? It’s an acronym standing for “Buy-Here-Pay-Here car.” This kind of car dealership offers what some people call “in-house financing.” It means the dealer is not only selling you the car, it is also loaning you the money to make the purchase. This is one of the most serious bankruptcy car buying mistakes you should avoid at all costs! If you’re not sure whether or not a dealer is a BHPH, one sign is that they almost always guarantee approval.

The problem is that the terms of the loan are probably going to be horrible. BHPH dealers are notorious for taking advantage of credit-challenged people by charging grossly high interest rates. Then, to add insult to injury, they often hide all kinds of fees and other inconvenient terms in the fine print of the finance contract. For example, the contract might specifiy that you have to make weekly payments instead of monthly payments, and if you’re late on just one payment they will repossess the car! No one should settle for those kinds of shady practices.

At Day One Credit, we don’t make loans, we find loans. We send your application out to all the lenders in our network who have special programs for bankruptcy customers. These lenders are competing for your business, which means you’ll end up with best terms possible for your particular credit situation.

3. Purchasing an Older Car with High Miles

older car

When bankruptcy filers assume there’s no way they could ever get approved for a car loan, they often end up trying to spend as little as possible on a car they can buy for whatever little cash they have. What the end up being able to afford without financing is often an older car with a whole lot of miles on it that’s not in the best of shape. But here’s the thing: When you settle for an older vehicle with high miles, you often end up paying a lot more in repairs that you thought you would. If you add all those repair costs to what you’ve already paid for the car, you might realize you would have been better off paying a higher price on a newer used vehicle with fewer miles that doesn’t need to constantly be in the repair shop.

Other kinds of cars you should avoid at all costs are those with salvage titles and those that are clearly lemons. Cars with prices that seem too good to be true are probably exactly that. If shop the bottom of the barrel, you inevitably get what you pay for, and then some in the form of hidden frame damage, flood damage or all kinds of other safety issues that will cost you way more than you bargained for. Financing a better used car will save you money in the long run, as well as help your rebuilt your credit.

4. Getting a Brand-New Vehicle Instead of Used Vehicle

new car

When you’re in an open or recently discharged bankruptcy situation, you need to make smart choices in order to make the most of the fresh start bankruptcy provides. The smart choice here is to get the most bang for your buck as possible, which makes buying new one of the most common bankruptcy car buying mistakes people make. Why is purchasing a brand-new vehicle a bad idea? The reason is because of the depreciation factor. In the first several years your new car loses 15-25% of its value each year, which means you’ll be “underwater” or “upside-down” on the loan for years. But if you buy a high-quality used vehicle, the previous owner has already taken the big hit on depreciation, which means you get a great car for a lot less money!

5. Choosing an Unaffordable Vehicle such as a Luxury Car

luxury car

This one is a variation on making responsible choices as a bankruptcy car buyer. Can you really afford a luxury car? Would it be a stretch to afford it? What will you do if something changes and your income goes down? At Day One Credit, we help people be realistic about what they can afford. After all, the last thing you want to happen when you’re trying to rebuild your credit is bite off more than you can chew and end up being delinquent on your car payments. What many people don’t realize is that there’s more costs to owning a luxury car than just the price tag and monthly payment. Luxury cars cost a lot more to insure, and they’re also going to cost more to maintain and repair when something goes wrong.

6. Failing to get GAP Insurance and Service Contracts

GAP and service contracts

What is GAP insurance? This is another acronym that stands for Guaranteed Asset Protection. It’s a type of insurance that covers any “gap” between the balance of a loan due on a vehicle and what an insurance company pays in the event of a total loss. In case you didn’t know, those two figures rarely match up. The insurance company often pays less for the car than what you still owe on it. No one likes being stuck with payments on a car that no longer exists, and GAP insurance is what protects you from that scenario. Service contracts are another kind of insurance that help pay for maintenance and repairs when needed. Please note that service contracts vary widely in terms of what is covered, for how long, and with what kind of deductible you have to pay. Read the fine print before signing on the dotted line!

7. Replacing a Great Car

great car

You would be surprised how many people in a bankruptcy situation make the mistake of getting a different car when they don’t even need one to being with. Yes, you want to rebuild your credit, and financing a car purchase is a great way to do that, but it should never be your only reason to do it, and especially if you already have a great car. Here’s what Day One Credit offers as a rule of thumb in this situation: If your current car is less than five years old, has relatively low mileage, and is paid off or close to being paid off, you should definitely stick with it! There are other ways to start rebuilding your credit, such as getting a secured credit card.

8. Buying a Car for Someone Else

someone else

Whether it’s your child, other family member, or a friend, buying a car for someone else may be a very generous thing to do, but often ends up being one of the worst bankruptcy car buying mistakes you can make. Remember, your top priority with a bankruptcy is to get your credit back into good shape. But when you buy a car for someone else, can you guess who is on the hook if something goes wrong? The answer is YOU! When you’re trying to restore your credit, the last thing you should do is become the one who is ultimately financially responsible for someone else’s vehicle no matter how responsible you think they are.

9. Having a Cosigner Who did Not Also File for Bankruptcy

co-signer

You have to be very careful to understand the situation you have with your current car and its outstanding loan if you decide to declare bankruptcy but had a cosigner on the loan. If you declare bankruptcy but your cosigner doesn’t, the lender can (and will) go after your cosigner to collect on the remaining debt. This can cause a great deal of pain and heartache between two people, so be sure you know the details of your current situation. Day One Credit is always happy to help you understand all your options – just contact us!

10. Lacking a Valid License

valid driver's license

Most lenders are going to require that your driver’s license be valid, up-to-date, and not suspended. You should not try to get a car at all if you lack a valid driver’s license because it could land you in some serious trouble. Don’t do it!

If you’re in a bankruptcy situation and you need a car, you won’t find a better option in the greater San Diego area than Day One Credit. Read our Why Day One page and see for yourself!

When you realize that the mountain of debt you’re facing for whatever reason is way more than you’ll ever be able to handle, filing for bankruptcy offers you a way out. In a Chapter 13 bankruptcy, you’ll work with an attorney and the bankruptcy court to come up with a reasonable payment plan that will … Continue reading “10 Bankruptcy Car Buying Mistakes to Avoid”

10 Signs it is Time to File Bankruptcy

10 signs to file for bankruptcy

Looking at all the different debts you owe versus what you make in terms of income can be an eye-opening experience. Some people go through life not paying attention to the big picture of their debt and income until something happens that forces them to do it. When the reality of the picture sinks in, it can cause a wave of panic, often followed by despair at what might feel like a hopeless situation. This is when filing for bankruptcy might be your best option to reduce your debts and work towards a brighter financial future. This article describes 10 different signs to help you realize when it’s time to file bankruptcy.

1. Struggling to Pay the Basics

struggle basic needs

If you find yourself having to choose which basic bills you can afford to pay each month and which ones to put off until next time, you’re either not earning enough income to meet your basic needs or have to send off too much of your income to keep up with your debts, leaving less for the basics. This can be the result of losing a job or experiencing a sudden medical emergency not fully covered by your health insurance (if you have health insurance to begin with). If debt payments are getting in the way of meeting your basic needs and normal bills, it may well be time to file bankruptcy.

2. Minimum Payments (or less) on Credit Cards

credit card minimum payments

Missing the occasional payment here and there on a credit is not a big deal. But if you find yourself in a situation with multiple credit cards and high balances where all you can ever do is pay the “minimum due” amount (and sometimes not even that much), you should definitely look at the rest your finances and see if it all is trying to tell you it’s time to file bankruptcy. Another variation on this problem is when you take a cash advance out on one card to make the payment on another, or if you’re constantly transferring balances to new cards. These are just delaying tactics that won’t solve your credit card debt problems in the longer term. In fact, it typically worsens the problem by allowing the debt to grow over time.

3. Collection Agencies are Constantly Calling

collection agencies

If you’re late on a loan payment, the company holding the loan will probably do an auto-call to remind you to make a payment. If the debt has been turned over to a collection agency because you’ve missed several payments, you can expect the calls to ratchet up in terms of frequency. Ignoring the calls is not a long-term strategy to free you from the mounting pressures of the debts you owe, which means it might be time to file bankruptcy.

4. Using Credit Cards or Personal Loans to Pay for Necessities

personal loans and credit cards

Some people purposefully use credit cards to pay for necessities because they earn rewards for their spending, such as frequent flyer miles and so on. That’s fine if they’re paying off their balance from month to month. But if you’re using credit cards to pay the basics because you don’t have enough money coming in, you run the risk of running up more credit card debt than you’ll be able to handle. This can be a reason to look at whether or not it’s time to file bankruptcy.

5. Debt Consolidation Looks Good

debt consolidation

You’ve seen the offers to consolidate your debt with a company that also promises to lower your overall monthly debt payment. This sounds great from a cash-flow perspective because you’ll have more money each month to spend. It is rarely, however, a good idea in the bigger picture of your financial future. The consolidation gives you a lower monthly debt payment by spreading the payments out over a much longer period of time, which also masks the interest you’ll pay over those years. This can mean you’ll end up paying significantly more than your original debts in the long term. You might be better off realizing it’s time to file bankruptcy.

6. Lawsuits from One or More Debt Collectors

lawsuits

If you receive a court summons because you’ve ignored the attempts of debt collectors to get you to pay up, it’s important to understand that you could end up being responsible for all the court costs and other legal fees involved in the lawsuit. Filing bankruptcy will stop the lawsuit in its tracks and help protect you from other actions of debt collectors.

7. Wage Garnishing

wage garnishing

After a lawsuit has been decided in favor of the debt collector, they have legal recourse to do things to get their money, although this varies by state. In some cases they can freeze your bank account. In other cases they can garnish your wages, which means your employer will be required to hold back a certain amount of your paycheck until the debt is paid off. Proactively filing for bankruptcy can prevent these sorts of things from happening. And make no mistake, wage garnishment is not as uncommon as you might think. Some estimates say as many as one in ten Americans have their wages garnished to pay off debts.

8. Foreclosure on Your Home

foreclosure

If you’ve fallen behind on your mortgage payments and foreclosure is looming on the horizon, bankruptcy can be a way to figure it all out and keep your home, either by eliminating many of your debts in a Chapter 7 bankruptcy, or sticking to a reasonable repayment plan over 3-5 years in a Chapter 13 bankruptcy.

9. You’re Tired of Living Paycheck-to-Paycheck

paycheck to paycheck

If every month is a major struggle because of your debt, it’s worth taking time to figure out what’s really going on. If the debts you owe total up to more than half your annual income, it’s unlikely you’ll be able to get your debt under control in the foreseeable future. Missing multiple payments can result in vehicle repossession, student loan default, collection agencies and lawsuits. All of which will keep your credit score going down instead of up. Filing bankruptcy can help you turn that situation around (note that student debt is almost never covered by bankruptcy, so you’ll still have to make good on that).

10. Your Income Isn’t Going to Go Up and You’ve Spent Your Savings

savings

Sometimes people who are struggling to keep up with their debts think they can hold out for more income, whether it’s getting a better-paying job or taking on an additional job (or two). But you need to be realistic about this. If the reality is that your income is not going to be going up any time soon, or only by a little bit, then your overall situation isn’t really going to change, which might mean a better approach is seeing it’s time to file bankruptcy. If you look ahead and come up with a real plan to pay off your debts but it’s going to take longer than five years to do it, bankruptcy is probably a better option. What often goes along with this is running through all your savings to maintain debt payments and living expenses. If all the savings are gone and you still have more debt than you can manage, it may be time to file bankruptcy. If you haven’t already started spending your savings, then don’t! Protect your long-term financial health and that of your family by exploring bankruptcy as an option.

When more than one of the signs listed above apply to you, then it’s probably time to file bankruptcy. You’ll need the help of a qualified attorney to ensure it’s the right option for you and to make it happen.  Day One Credit is pleased to recommend any of the lawyers listed on our Bankruptcy Attorney Page.  Alternatively, also check out our post on how to choose a good bankruptcy lawyer.

If you are considering filing bankruptcy or have recently filed and realize you need to replace your car, Day One Credit specializes in bankruptcy car loans to make sure you can get the vehicle you need without your bankruptcy getting in the way. Our goal is simple: Helping each customer going through bankruptcy get the car and loan they need while also helping them rebuild their credit. Feel free to contact us to speak with one of our friendly customer service representatives to learn more about how we can help. You can also get started right away when you apply online with our easy online application, which will give you an answer in a matter of minutes thanks to our great network of lenders who all compete for your business. This is how we find the loan option that’s best for you!

Looking at all the different debts you owe versus what you make in terms of income can be an eye-opening experience. Some people go through life not paying attention to the big picture of their debt and income until something happens that forces them to do it. When the reality of the picture sinks in, … Continue reading “10 Signs it is Time to File Bankruptcy”

Bankruptcy Car Loan Guidelines

bankruptcy car loan guidelines

Every time a lender makes a loan to a borrower, they’re taking a big risk. How can a lender know if the borrower will make on-time payments? How will the lender know the borrower won’t default on the loan? They honestly don’t know, which is why lending is a risk. But through experience, lenders have discovered ways to help them predict the chances of default.

What the lenders do is look at particular data and characteristics related to a borrower to assess the level of risk in making a loan to that borrower. As lenders refine this risk-assessment process, they often also create loan guidelines borrowers can use to see if they’re even eligible. This helps save time by preventing people from applying for a loan who would most likely be rejected anyways. For that to work, however, consumers need to understand the financial terms used in loan guidelines. This article will help you understand the common financial terms you’ll find in bankruptcy auto loan guidelines so you can decide whether or not this type of a loan is right for you.

How Credit Reports and Credit Scores Affect Loan Guidelines

credit reports and bankruptcy car loan

Some lenders have a very clear guideline for a minimum credit score potential borrowers have to meet in order to be eligible to apply for a loan. It’s going to vary widely from lender to lender depending on the level of risk they are willing to take on in making a loan. The higher the credit score requirement, the less risk they are willing to expose themselves to, making it harder or impossible for folks with challenged credit to get a loan through that lender.

At Day One Credit, we don’t have a minimum credit score requirement. In fact, you might qualify even if you have no credit history at all! Because we specialize in bankruptcy car loans, we know your credit score is already not good. But because you’re in bankruptcy or recently had one discharged, we know you’re on the pathway to restoring your credit and doing better. The lenders we work with are the ones who also look past a credit score to serve this group of customers and help them make the most of the fresh start bankruptcy provides.

Payment to Income and Debt to Income ratios: PTI and DTI

income and debt ratios

Many lenders want to take a close look not just at your income, but how much of your monthly gross income (before taxes are taken out) is going to go towards the loan payment. This is a way of making sure you don’t end up with a loan payment you really can’t afford. Lenders refer to this ratio as PTI – your payment to income ratio. But they don’t just take into account the monthly car loan payment. They’re also going to add in your monthly car insurance payment because you need to be able to afford both.

You can figure out your own PTI ratio by taking what you think you can afford in terms of a car loan payment plus an estimate of the monthly car insurance payment, add them together, and then divide that total by your monthly gross income and express the result as a percentage. A lot of lenders who work with people who have challenged credit generally want your PTI ratio to be in the 15-20% range. As an example, let’s say you’re interested in buying a used car but you need to finance it. You have an idea of what you want and think a reasonable monthly car loan payment for you would be $250/month and insurance of about $90/month for a grand total monthly car-related payment of $340. Now let’s say your gross monthly income is $2,400. You take the payment of $340 and divided it by your income of $2,400 and get .14 (rounding down), then move the decimal point over to places to the right and get 14%. This would be an acceptable PTI ration for many lenders. That is, unless you have a lot of other debt payments to make. This is why most lenders will also look at your DTI ratio – your debt-to-income ratio.

Your DTI gives lenders a picture of how much of your gross monthly income has to go to all your debt and bill payments combined together. If most of your monthly income is eaten up with your bills, lenders will question how you can add another significant bill in the form of a car and insurance. Calculating your DTI is similar to calculating your PTI. The difference is that in the case of DTI what you’re adding together are all your regular monthly bills and debt payments for housing, utilities, and so on. Many lenders get very nervous about making a loan to you if your DTI is more than 50%.

Here at Day One Credit, the advantage you have is the fact that you’ve either declared bankruptcy or have recently had your bankruptcy discharged. This is when your debt-to-income ratio is going to be much better than it was before you declared bankruptcy, and the lenders we work with understand how much this matters.

Day One Credit Bankruptcy Car Loan Guidelines

Day One Credit bankruptcy car loan guidelines

At Day One Credit, we take great pride in helping people who have declared bankruptcy get the car they need with our bankruptcy car loans. The lenders we work with specialize in this type of lending, and we get them all competing with each other to get your business. This helps you get the best terms possible given your credit situation. We find we can help most people in a bankruptcy situation, but not everyone. We do have our own eligibility guidelines to help you determine whether or not you should apply. Please note, however, that meeting our eligibility guidelines does not guarantee you’ll get a loan. We still have to evaluate your application to make sure we can work with you. If you meet the guidelines below, you should feel free to apply:

Income: We need documented proof of minimum gross monthly income of at least $2,200 per month. You can prove your income with W-2 forms from your employer or with 1099 forms or bank statements if you are self-employed.

Bankruptcy Status: Because we work exclusively with bankruptcy customers, you need to have either already filed for bankruptcy or have had your bankruptcy recently discharged.

Valid Driver’s License: Unfortunately, if your driver’s license is expired or suspended, we cannot help you.

Those are our three most basic eligibility guidelines. But we also find there other cases where we think a bankruptcy car loan is not a good choice for you, including the following:

You Already Have a Great Car: If your current vehicle is still on the new side with low miles, is paid off or close to being paid off, you should just stick with it.

Income is Not Stable: In order for a bankruptcy car loan to work in your favor, your income needs to be stable. If you know your income is about to drop or you’re going to experience a sudden increase in expenses, it would be better not to apply.

Cosigner Bankruptcy Status: Sometimes our bankruptcy customers want to use a cosigner to boost their chances of getting a loan. But if your cosigner didn’t also file for bankruptcy and things go badly with payments, the lender will go after the cosigner.

Our commitment to you at Day One Credit is to help you understand the details of your own credit situation and give you a realistic picture of what’s possible. We aren’t going to let you take on a loan payment you can’t afford because that doesn’t help anyone.

The other piece of good news about working with Day One Credit for a bankruptcy car loan is it’s one of the best ways to start rebuilding your credit after bankruptcy. The quickest, surest pathway to restoring your credit is with a new loan and making on-time payments. Most traditional lenders won’t give you the time of day with a bankruptcy on your credit history, but it’s our whole mission to work with bankruptcy customers!

We have lending programs that don’t require any down payment, and we will also help you find the very best affordable used car that’s right for you. If you meet our basic bankruptcy car loan guidelines, you can start the process online at our website when you fill out our easy online application. If we need to clarify any of the information on your application, we’ll contact you. And then you’ll hear back from us in a matter of minutes! But if you have more questions about how all this works, please feel free to contact us – we’ll be happy to talk you and help you understand everything you need to know!

Every time a lender makes a loan to a borrower, they’re taking a big risk. How can a lender know if the borrower will make on-time payments? How will the lender know the borrower won’t default on the loan? They honestly don’t know, which is why lending is a risk. But through experience, lenders have … Continue reading “Bankruptcy Car Loan Guidelines”

Do Credit Repair Services Work?

credit repair services

Having a bad credit score can keep you from getting the loan or credit card you need. If your credit report is long and complex with lots of past issues, you’d be surprised how many of them probably shouldn’t even be on there anymore. Things don’t get fixed automatically on your credit report even though they should. Cleaning up your credit history can go a long way towards improving your credit score and getting back on track to where you want to be financially. But when you sit down and look at your credit report, it’s hard to know where to begin and what to do about it. For this reason, many people wonder whether or not credit repair services work. This article will give you some advice about whether or not to work with a credit repair company.

Credit Repair Services are Not Free

cost of credit repair services

The most important thing to realize about credit repair services is that they come with a cost. There are many companies out there who claim they can help you improve your credit score by find and fixing things on your credit report. And they’re going to charge fees to do it. How much you’ll be charged and how long it will take varies from company to company, but here’s how CreditKarma describes it:

“Depending on the company, you might pay a one-time flat fee, or pay for each derogatory mark the company removes from each of your reports. This may start around $35 per deletion and could range to $750 or more. The company may also charge by the month, ranging from $50 to $130 or more. You might also pay setup fees or a fee for accessing your credit reports.”

Please understand that anything a legitimate credit repair service does you can do yourself and it won’t cost you a dime. The caveat, of course, is that it does cost you time, and quite a bit of it, to do it on your own. So a big part of your decision about whether or not to use a credit repair service has to do with whether or not you can afford to pay for it or are willing to roll up your sleeves and do it yourself.

What Should be Your Credit Score Goal?

credit score goal

The simplest answer to this question is better than what it is now, right? But it helps to know how lenders view different levels of credit scores. The most commonly used credit score that lenders and creditors look at is FICO. Your FICO credit score can generally range from 300-850. It is usually interpreted as follows:

Less than 580 = Poor

580 to 669 = Fair

670 to 739 = Good

740 to 799 = Very Good

800 and above = Exceptional

Each and every error you find and fix on credit report, every old bad-mark that can be removed if enough time has passed, will improve your score. This could be really important if you’re right on the edge being able to bump yourself into the next better category. That’s when it’s really worth putting some time and effort into seeing what you can fix yourself to get you where you want to be.

Finding Legitimate Credit Repair Services

legitimate credit repair services

If you decide you don’t have the time to fix your credit report yourself and can afford to pay for a service, how can you figure out which companies are legitimate and which ones aren’t? This is important because there are plenty of both out there! Here are some signs that a credit repair company is NOT legitimate:

They want to charge you for your credit report. You are entitled to a free copy of your credit report once a year from the three major credit bureaus (Equifax, TransUnion, and Experian). Any credit repair company who wants to charge you for it shouldn’t be trusted. If part of what you want credit repair services to do for you is monitor your credit report on a monthly basis, there are plenty out there who don’t charge anything for it, or charge very little for it.

They want to charge you up-front for services. You should never have to pay a bunch of money up-front to get started with credit repair services. The most legitimate companies will only charge you based on their performance and getting results for you.

There are no real people to talk to. A credit repair service you can get started with totally online without talking to a real person is probably a scam and should not be trusted.

Read customer reviews. See what other customers have to say about working with the company. But don’t trust the reviews on the company’s own website, where negative reviews may be filtered out. Go with independent sites like Yelp, Google, Trustpilot and others. Although there is still a chance that some of the good reviews are fake, the bad reviews are probably real.

Unrealistic promises. A good rule of thumb is that if it sounds too good to be true, it probably is. For example, there is probably negative information in your credit report that is accurate and should be there – any company that says it can remove that kind of information is not legitimate. Any company that guarantees a substantial increase to your credit score should be avoided because there’s no way such an outcome can be guaranteed. And if a company says it can legally create a new identify for you, run away as fast as possible!

As you can see, there is a lot to watch out for when it comes to finding a reputable credit repair company. This is because it’s also an industry known to full of scammers. So here’s the thing: If you can do the kind of research it takes to identify legitimate credit repair services, you’ve definitely got the skills to do your own credit repairs if you have the time. It also pays to know your rights. As noted in a NerdWallet article:

“Just as laws protect you from unfair reporting and collections, there are laws to protect you from credit repair companies that mislead. The Credit Repair Organizations Act requires companies to give you a three-day right to cancel without charge, a firm total on costs and an estimate of how long it will take to get results.”

If you’re serious about wanting to improve your credit score but want help doing it, consider going with a credit counseling agency instead of credit repair services. Credit counseling is usually a free service offered by a non-profit financial education organization whose mission is to help people get better control of their finances and debts. But if you go to one of these and they say they want to charge you for services, then it’s not something you should do. Search your state’s government website to find out about any free credit and debt counseling services they may offer.

Rebuilding Credit with a Day One Bankruptcy Car Loan

Day One Credit bankruptcy car loan

One of the fastest ways to begin rebuilding and restoring your credit after declaring bankruptcy or having a bankruptcy discharged is with a new line of credit and on-time payments. Day One Credit works exclusively with bankruptcy customers to match them up with a lender who specializes in bankruptcy lending to help your make the most the fresh start bankruptcy gives you. We’ve spent years building an amazing network of lenders, and when you apply to Day One, they will all be trying to get your business, and that’s the kind of competition that ensures you’ll get the best rates possible for your situation.

While we find we can help most people, not everyone is eligible, so be sure to visit the Day One home page and scroll down to “Day One Eligibility Guidelines” to see who we can help and who we can’t. Whether you’ve filed a Chapter 7 bankruptcy, a Chapter 13 bankruptcy, or have had one recently discharged, Day One is ready to help you get the loan and the car you need. In fact, when you fill out our fast online application, you can get an answer back in minutes!

There are many benefits to be gained with a Day One bankruptcy car loan. Besides helping quickly get your credit back on track, you can use it to get out from under a bad car loan. If you owe more on your vehicle than it’s worth, we’ll help you ditch your upside-down or underwater car loan for a better deal. We’ll also help you find a great car – something used to get the most bang for your buck, but as recent a model as possible with lower miles and in great shape so you’ll spend less in the long run on repairs compared to an older used car. At the same time, you’re avoiding the huge hit in depreciation you take with a brand-new car. Trust us, we’ve got this figured out through years of experience!

You may have questions about how all this works. Start out by visiting our common questions page to see if the answers or there. If not, contact us and we’ll be happy to talk to you!

Having a bad credit score can keep you from getting the loan or credit card you need. If your credit report is long and complex with lots of past issues, you’d be surprised how many of them probably shouldn’t even be on there anymore. Things don’t get fixed automatically on your credit report even though … Continue reading “Do Credit Repair Services Work?”

Best Cars Choices for Bankruptcy Car Loans

bankruptcy cars

Whether you’re in the middle of or about to file for either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, getting the car you need is possible with a bankruptcy car loan. But one thing you have to consider very carefully is what you’ll select for your next ride. This article provides guidance on bankruptcy car loan car choices so you’ll have the information you need to make an informed decision.

Is a Bankruptcy Car Loan a Smart Choice?

bankruptcy car loan

Filing for bankruptcy is the best thing you can do when you want to retake control of your financial life and get out from under a mountain of debt. But what happens when you discover you also need to replace your car at the same time? If you haven’t already filed for bankruptcy, go ahead and get that done first because then you’ll be eligible to work with lenders who specialize in bankruptcy car loans, and who might also be able to get you an interest rate better than trying to go with a traditional lender before you file. This is because the traditional lender is only going to look at your low credit score and will probably reject your application. But with bankruptcy car loan specialists, they will look past your low credit score to see how you’re taking actions to eliminate or reduce your debts, which puts you in a better position to take on a new car loan.

What NOT to do with Bankruptcy Car Loan

bankruptcy mistakes

Remember that the whole point of filing for a Chapter 7 bankruptcy or Chapter 13 bankruptcy is to make a fresh start. You want to make smart choices to make the most of your second chance. Unfortunately, we’ve seen far too many people make one or more serious mistakes. Here are seven things you don’t want to do:

Don’t buy a car for cash.

This would be a serious mistake if you have filed for bankruptcy. Why? Remember that filing for bankruptcy means your credit score is in serious disrepair. One of your primary objectives should be rebuilding your credit so you’ll be in good shape for your financial future. Paying cash for a car won’t help you rebuild your credit. The best way to rebuild your credit is to get a new loan and make on-time payments. A bankruptcy car loan is a great way to do this.

Don’t get a BHPH car loan.

This is another mistake you want to avoid. BHPH is an acronym that stands for “buy-here-pay-here” car dealerships, meaning they offer what is called “in-house financing.” Do not deal with a place like this! BHPH dealerships are notorious for saddling customers with horrible loan terms. At Day One, we rely on a network of specialized fresh start program lenders we’ve developed over years of helping bankruptcy customers.

Don’t buy an older car with high miles.

When you make the mistake of buying an older vehicle with high miles because the price seems too good to pass up, you’re running the big risk of paying a lot more over time in repairs because the car isn’t in good shape.

Don’t buy an expensive luxury car.

Even if you were to get approved for a loan to cover an expensive luxury car, this would be a mistake because the monthly payment is probably going to be a big stretch for you. Then you’ll be shocked at how expensive it is to maintain and insure a luxury car properly. Before you know it, you’re trapped in a loan and a car you can’t handle financially, which is the exact situation you don’t want to be in when you’re trying to restore your credit after a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.

Don’t buy a brand-new vehicle.

Buying a brand-new vehicle seems like a good idea because you know it ought to be reliable for years, but what you’re not considering is the depreciation factor. A new car drops in value by at least 10% as soon as you drive it off the lot, and continues to depreciate by at least another 10% during the first year. It continues to depreciate by anywhere from 15-25% for another several years. The downside of this is that you’ll be “underwater” or “upside” down on the loan for years, meaning you’ll owe more on the loan than the car is worth. Buying a high-quality used car that’s a newer model with lower miles means you don’t take as much of a hit from depreciation – the previous owner took the hit. You get a lot more car for a lot less money when you buy the right used car.

Don’t buy a salvage car.

Salvage cars seem like an attractive choice because they are so cheap, but buying one is one of the worst mistakes you could make. On the surface it looks like it’s fine, but how do you know it was repaired properly? Salvage vehicles almost always end up having all kinds of serious problems that end up costing you way more to fix than you could imagine. Never buy a salvage vehicle!

Don’t buy a car you can’t afford.

When you’re trying to rebuild your credit after filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, you need to be very careful about how much new debt you take on with a bankruptcy car loan. If you aim too high and buy a car you really can’t afford, you could end up missing payments or defaulting on the loan, which won’t help your credit. By making sure you buy a car you can afford, you’ll be able to make the on-time payments needed to restore your credit. Stay on the safe side and set yourself up for success with a car you can definitely afford.

Best Cars for Bankruptcy Financing

best bankruptcy cars

By listing seven of the big mistakes we’ve seen people make when they need a car during or after a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, it should now be clear what you should focus on to make smart choices with a bankruptcy car loan: You want to spend time figuring out what you can comfortably afford for a payment, then find a newer used car in great shape with low miles. Here are the kinds of cars satisfied customers have purchased recently with a bankruptcy car loan:

Nissan Altima

Hyundai Sonata

Toyota Camry

Toyota Corolla

Kia Optima

Hyundai Elantra

Nissan Sentra

Honda Accord

Dodge Journey

These are the kinds of cars that our customers have found to be reliable and affordable choices for a bankruptcy car loan.

But there are some other smart choices you can make that will help ensure you get the most out of your purchase and protect yourself financially. One of the most important things is making sure you get GAP (guaranteed asset protection) insurance. If your car gets totaled, the insurance company is going to pay out the market value of the vehicle. The amount of the insurance payment will probably not be enough to cover the full balance of what you owe on your loan. GAP insurance will cover that difference – and it’s an inexpensive way to make sure your loan will be paid in full if the car is a total loss.

Another smart choice is purchasing a service contract with your vehicle. If your car suddenly breaks down or needs repairs, a service contract takes the sting out of getting the work done. Service contract vary in terms of how long they last, what is covered, and whether or not there is a deductible. They often include roadside assistance and rental car reimbursement as well. At Day One, we’ll help you figure out what kind of service contract will best serve your needs.

Day One Credit: Your Bankruptcy Car Loan Specialist

Day One Credit

If you’re dealing with a Chapter 7 bankruptcy or a Chapter 13 bankruptcy but also need to replace your car, Day One Credit is ready to help you make all the smartest choices with a bankruptcy car loan. Our network of top-shelf lenders are the ones who specialize in meeting the needs of bankruptcy customers, and when they compete for your business, you come out ahead! Our fast online application process will get you an answer in a matter of minutes and you’ll be ready to make the most of the fresh start filing bankruptcy gives you to rebuild your credit. Need more information or have questions? Contact us today!

Whether you’re in the middle of or about to file for either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, getting the car you need is possible with a bankruptcy car loan. But one thing you have to consider very carefully is what you’ll select for your next ride. This article provides guidance on … Continue reading “Best Cars Choices for Bankruptcy Car Loans”

Common Questions About Filing Bankruptcy Answered

common bankruptcy questions

Filing bankruptcy is the best thing to do if you’re suffering from an overwhelming amount of debt, whatever the reasons for it might be. But if you’ve never done it before, you probably have many questions about the process. In this article, we’ll cover the most common questions about filing bankruptcy we hear from our customers, including questions about bankruptcy car loans.

General Questions About Filing Bankruptcy

General Bankruptcy Questions

Day One Credit has been helping customers get the bankruptcy car loans they need for years. Along the way, we’ve heard all the questions people wonder about most when they are considering filing bankruptcy. Here are our answers to those common questions:

Question: What is the purpose of filing bankruptcy?

Bankruptcy laws were created in order to provide a way for people to get out from under crushing debts. It is a federal legal process, which means the laws related to bankruptcy do not vary from state to state. The one area of bankruptcy that does vary is this: Each state determines for its citizens what real and personal property is exempt from the bankruptcy process. Non-exempt property and assets might be sold during the bankruptcy process in order to pay off some or all of your unsecured debts (credit cards, personal loans, utilities bills, etc.). How this is handled depends on the type of bankruptcy you file (usually Chapter 7 or Chapter 13). Generally, the property you own that you need to maintain a household and employment will be exempt from the bankruptcy process. This part of the process can be complex, which is why you need a qualified bankruptcy attorney to help you successfully navigate the process. Anyone filing bankruptcy is required to go through credit counseling before filing, and then take a financial management instructional course after filing, providing a certificate of completion to the bankruptcy court before the bankruptcy can be discharged. You also have to pay for each of those required courses (the fee can range from $25-$50 per course).

Question: How does filing bankruptcy help me?

Filing bankruptcy helps you to either eliminate or pay down some or all of the debts that have become overwhelming and impossible for you to get ahead of on your own. When you file, the bankruptcy court assumes legal control of your qualifying debts and non-exempt property. A bankruptcy trustee is assigned to your case to make sure your creditors are paid as much of what you owe them as is possible given your financial situation. Upon filing, an automatic “stay” is put in place that prevents creditors from contacting you directly about your debt or trying to take any of your property. Bankruptcy stops the debt collection process in order to figure out what can be paid and give you a new start without so much debt hanging over your head.

Question: How will I know if I am eligible for filing bankruptcy?

This is one of the many reasons why getting the help of a qualified bankruptcy attorney is so important if you’re thinking of filing bankruptcy. The bankruptcy attorney will want to see documentation on all your different debts and all the property and assets you own. After examining all this information, the bankruptcy attorney can tell you which one of the various types of bankruptcy you qualify for and is the best option for you.

Question: What are the different types of bankruptcy?

The vast majority of bankruptcy filings are for either Chapter 7 or Chapter 13. There is also a Chapter 11 that is for businesses, and a Chapter 12 that is for specifically for family farmers and family fishermen. In a Chapter 7 bankruptcy (also called a “straight” or “liquidation” bankruptcy), your debts are wiped away or discharged after any non-exempt property is sold off to pay creditors. If you don’t have any non-exempt property, all your qualifying debts will be eliminated. In a Chapter 13 or “debt adjustment” bankruptcy, a repayment plan is created that fits your financial situation in order to pay off or get caught up on debt payments based on your income.

Question: Are all debts included?

No. Money you owe for child support, alimony, fines and some taxes are debts not included in bankruptcy. Any debts you fail to list on your bankruptcy filing will not be included. Any loans you obtained by giving false information are not included. Student loans are usually not included unless the court thinks keeping up payments would be an undue hardship. Any debts you have that come from “willful and malicious” harm to others or from criminal activities won’t be included. Your debts for exempt property like your house and car won’t be included unless they are part of your Chapter 13 filing to get caught up on payments.

Question: How much time does filing bankruptcy take?

When you’re working with a bankruptcy attorney, you’ll need to meet several times in order to gather all your documentation and determine which of the types of bankruptcy is right for you. From there, the length of time to completion (discharge) of the bankruptcy process is 3-4 months for a Chapter 7 and 3-5 years for a Chapter 13 because it involves a multi-year repayment plan.

Question: How much does filing bankruptcy cost?

In California, the fee for filing bankruptcy is $335 for a Chapter 7 and $310 for a Chapter 13. If you cannot pay the fee all at once, the bankruptcy court might allow you to pay it with installments. These are just the filing costs. Hiring a qualified bankruptcy attorney to help you through the process is an additional cost that varies depending on what the attorney charges, which in turn depends in part on the complexity of your case.

Question: How much should I pay an attorney for filing bankruptcy?

Most bankruptcy attorneys will handle Chapter 7 bankruptcies for a flat fee that can range from $1,000 to $1,600 or more. In California the average is around $1,560 (the national average is $1,450). Attorney fees for a Chapter 13 tend to be more than a Chapter 7 because a Chapter 13 bankruptcy is more complicated with its required repayment plan. When there is no business involved in a Chapter 13, the southern district of California that includes San Diego assumes that fees in the range of $3,300 to $5,000 are normal and acceptable.

Question: What is a bankruptcy discharge?

The discharge is the end of the bankruptcy process. It is court order issued that says you are no longer required to pay the debts included in your case and creditors can’t go after you anymore because the debts in a Chapter 7 have either been paid off or are wiped away. In a Chapter 13 it means you’ve successfully completed your repayment plan, either paying off debts or getting caught up on your payments.

Bankruptcy Car Loan Question

Bankruptcy Car Loans

If you find yourself in bankruptcy or considering filing bankruptcy but you also need to finance a car purchase, Day One Credit is your go-to solution in the greater San Diego area for all types of bankruptcy car loans. Here are the most common questions we hear from people seeking a bankruptcy car loan:

Questions About Bankruptcy Timing

Timing for Bankruptcy

Question: Do I have to wait until my Chapter 7 Bankruptcy is discharged?

Many Chapter 7 Bankruptcy filers think they have to wait some period of time before they try to get a car loan or wait until the bankruptcy is fully discharged. Not true! As soon as you file your Chapter 7 Bankruptcy and have a case number, you can apply!

Question: Do I have to wait until my Chapter 13 Bankruptcy is discharged?

Many Chapter 13 Bankruptcy filers think they have to wait some amount of time before they try to get a car loan or wait until the bankruptcy is fully discharged. Not true! As soon as you have your Chapter 13 Bankruptcy confirmed payment plan, you can apply! NOTE: You will also need to get authorization from your trustee or judge before you can incur the new debt.

Question: If my bankruptcy is discharged, do I have to wait two years?

Many people have heard that lenders want to wait two whole years after a bankruptcy is discharged before they’ll consider making a loan. That may be true for some lenders, but not for Day One lenders! The day your bankruptcy is discharged, you can apply!

Question: How soon can I get a new loan?

At Day One Credit, filling out our auto loan application  takes less than five minutes. And then you’ll have an answer from us in just minutes!

Questions About Terms and Rates

Terms and Rates

Question: Do I have to put any money down?

While making a down payment is always a good idea if you can do it, we understand that many of our customers can’t, which is why we do not require it. We work with many lenders who have no-money-down programs.

Question: What will be my payment?

Your monthly payment depends on factors such as the price of the vehicle, your down payment (if any), length of the loan, and the interest rate.

Question: What will be my APR?

Your interest rate and APR vary greatly because they depend on many factors, including your credit, the vehicle’s age and mileage, your previous auto history, how many times you previously filed for bankruptcy, the length of the loan, and more. With a bankruptcy, your APR will be higher than customers with good credit. We work with many lenders and are able to secure the best rate available for your credit situation. To figure out your rate, fill out our quick finance application and we will get back to you in minutes!

Question: If I buy a new car, can I later refinance for a lower rate and would there be a penalty?

Yes, you can refinance a new-car loan with Day One and get a lower interest rate, and there are no penalties whatsoever!

Question: Am I going to get a better rate if my BK is discharged?

Maybe, but it depends. If you took specific actions while your BK was open (3-4 months on average for a Chapter 7, 3-5 years on average for a chapter 13) to improve your credit or save up money for a down payment, you might get a slightly better rate. But many people simply can’t wait to get the car they need, and waiting may not make much of any difference at all. We can also often offer you even better financing if your bankruptcy isn’t yet discharged.

Questions About Our Cars

Best Bankruptcy Cars

Question: What kind of car and amount financed I can get?

Our lenders do have vehicle eligibility guidelines: 2012 or newer and fewer than 75,000 miles are preferred. You can be qualified for as much as $35,000. Most importantly, the vehicle you are interested should be affordable.

Question: Why should I buy a used car?

The goal is to buy a used vehicle because you get more bang for your buck if it’s a newer car with fewer miles. They’re way cheaper than buying brand-new and will cost you less in the long run.

Question: What is going to happen with my old car?

If you have equity in your current vehicle, you can trade it in and apply it as a down payment on your next car. And if you have a negative balance, you can still surrender it to the lender and we’ll make sure you don’t have to worry about that negative balance.

Other Questions About Bankruptcy Car Loans

Bankruptcy Car Loans

Question: If I signed a reaffirmation agreement can I still get a new loan?

Yes, you can! When you signed a reaffirmation agreement, all it meant was that you were committing yourself to continued payments on your vehicle’s loan. But you still have the freedom to sell that vehicle and get another if you can qualify for the new loan. That may be difficult if you owe more on your vehicle than it’s worth (being “underwater” or “upside-down” on the loan), but we’ve successfully helped many customers with this exact situation.

Can I get out my current underwater car loan?

Yes, that is another major advantage of working with Day One. We’ll help you get out of that upside-down loan and get you a high-quality used car that’s more affordable.

Can I refinance my loan and would there be any penalties?

Yes, you can refinance your current car loan with us to get a lower rate and there are no penalties!

Question: What is a Fresh Start Program?

Bankruptcy laws were designed to help people get out from under crushing debt loads and make a fresh start. A Fresh Start Program means a loan program designed specifically to help consumers get the credit they need even though they have filed for bankruptcy. At Day One, that means getting a car loan in spite of a bankruptcy with our specialized network of lenders.

Question: Can you refer me to a good bankruptcy attorney?

Some of the best bankruptcy attorneys area refer people to us, and we would be happy to refer you to one of them. Check out our Attorney Page to get the help you need! Also read on other aspects of choosing the right bankruptcy attorney.

If you have other questions about bankruptcy car loans, please feel free to contact us to speak with one of our friendly customer service representatives to get the help you need. And when you’re ready, apply at Day One filling out our application is quick and easy, and then you’ll get an answer back from us within minutes! Our fantastic network of top-shelf lenders means we’ll be able to find the best loan option for your specific bankruptcy situation, whether it’s a Chapter 7, Chapter 13 or recent discharge!

Filing bankruptcy is the best thing to do if you’re suffering from an overwhelming amount of debt, whatever the reasons for it might be. But if you’ve never done it before, you probably have many questions about the process. In this article, we’ll cover the most common questions about filing bankruptcy we hear from our … Continue reading “Common Questions About Filing Bankruptcy Answered”

Why You Receive so Many Mailings After Filing Bankruptcy

mailings after filing bankruptcy

Some people are reluctant to file for bankruptcy even when they know they should because they think everyone is going to know about it. They’ve also heard that people get a lot of mailings after filing for bankruptcy with all kind of offers from debt relief programs to credit card offers to various kinds of loans they can get in spite of their bankruptcy. This article will explain why you receive so many mailings after filing bankruptcy and also explain who is likely to know about your filing and why.

Filing Bankruptcy is a Matter of Public Record

bankruptcy is public record

The first thing you should know is that because filing bankruptcy is a federal court proceeding, the information about your case is matter of public record and in the public domain. But just because that’s true doesn’t mean everyone will know about your case. The information about your bankruptcy filing is entered into a system called PACER (Public Access to Court Electronic Records), which is an electronic database of case and docket information from the United States district courts, United States courts of appeals, and United States bankruptcy courts. However, using PACER requires the user to register, get a password, and also pay 8 cents for each document viewed. In other words, your friends and neighbors are not using PACER to find out who in their community has filed for bankruptcy. Very few regular people will know about your case.

That said, there are still a few smaller towns where local bankruptcy filings are published in the newspaper or online, but these are really few and far between. If you’re concerned about this, ask a local bankruptcy attorney and they should be able to tell you whether or not this happens in your area. In any larger city, it won’t happen because it would be way too much to publish on a regular basis.

What About All Those Mailings You Get After Filing Bankruptcy?

bankruptcy mailings

There are people and companies for whom it makes sense to have PACER accounts and shell out the money for large amounts of records. And this is the source of all those mailings you get after filing bankruptcy. There are companies who will pay the money bankruptcy records in their area because they offer services of some kind tailored to bankruptcy filers. These can include debt relief or debt consolidation programs (many of which are either not a good idea or are outright scams) while others are offers of credit or loans you can get in spite of your bankruptcy. It’s easy to dismiss all of this as junk mail and just toss it in the recycling bin, but you should take a closer look at them because there could be some good offers in there. After all, one of the things you should be doing during and after your bankruptcy is rebuilding your credit, and getting a new line of credit is great way to do that.

For example, Day One Credit uses PACER for access to mailing addresses of people who have filed for bankruptcy. Few things can feel as stressful as filing bankruptcy and then discovering you need to replace your car, and fast. Unfortunately, many people think their bankruptcy prevents them from getting the car loan they need. Not true! But to let people know they can get a bankruptcy car loan to buy the car they need, Day One is willing to pay a small amount to reach potential customers in need. This is a good reason to take a closer look at some of those mailings before you recycle them. The right offer could be waiting for you to help you rebuild your credit.

What About Credit Card Offers?

credit card offers

Some of those mailings will be for credit card offers, which some people find confusing. This is especially true when their bankruptcy includes a credit card overdue balance with a company that is also sending them a post-bankruptcy credit card offer. What gives? This is just a case of the left hand not knowing what the right hand is doing. Your overdue credit card balance in your bankruptcy has probably been sitting in the collections department of the card company for some time. Meanwhile, a whole other department is responsible for getting credit card offers out to as many people as possible.

With these credit card offers, you’re not necessarily being targeted because of your bankruptcy, but you might be. Those credit card mailings go out to a lot of people and they cast a very wide net, so chances are they don’t even know you filed. And it will be a whole different set of people who evaluate your creditworthiness if you apply, so there’s no guarantee you’re going to be accepted. Offers to just apply usually mean they haven’t even peeked at your credit report, whereas offers that mention preapproval tend to indicate they’ve looked at something that makes them think you’ll probably be accepted. But if they do take a closer look and see a bankruptcy or a low credit score, they might still approve you, but at a much higher interest rate than the original offer (if there was one).

One way to restore your credit without as much risk as an unsecured card that might be hard to get is to opt instead for a secured credit card. You save up however much money you want for a credit limit and deposit it with the company who issues you the secured credit card. If you fail to make a payment on your balance, the company already has the cash on hand to cover it. But if you want this to help rebuild your credit, you’ll pay off the balance each and every month on time.

Rebuild Your Credit with a Day One Bankruptcy Car Loan

bankruptcy car loan offers

There’s a kind of catch 22 concerning credit scores and debt and bankruptcy. You declare bankruptcy because your debts have gotten out of hand for whatever reason and you need to make a fresh start. Your credit is often seriously damaged through this process, so you want to improve your credit score to make sure your options are open for future needs like applying for a mortgage or getting a car loan. But the only way to improve your credit score is by having credit that you use responsibly. After getting rid of a bunch of debt, it feels like the last thing you want to do is take on any new debt, but that’s exactly what you have to do to actively rebuild your credit!

A great way to do this is working with Day One to get a bankruptcy car loan. We encourage our customers to purchase high-quality newer used cars with low mileage in order to get the most bang for the buck. When you use our fast online application we send it out to multiple top-shelf lenders in our network who specialize in helping bankruptcy filers get the car loan they need. We get their offers and then select the best one to present to you – all within a matter of minutes! We’ve been doing this for years and have a long history of getting great results that our customers love, along with customer service that treats you like a VIP. Got questions? Contact us to get answers!

Some people are reluctant to file for bankruptcy even when they know they should because they think everyone is going to know about it. They’ve also heard that people get a lot of mailings after filing for bankruptcy with all kind of offers from debt relief programs to credit card offers to various kinds of … Continue reading “Why You Receive so Many Mailings After Filing Bankruptcy”

12 Bankruptcy Myths Busted

bankruptcy myths busted

There are a lot of misconceptions out there about bankruptcy. We hope that after reading this article you have a better understanding about bankruptcy and what is and what it is not. Let’s set the record straight with 12 bankruptcy myths busted.

Myth #1: Bankruptcy is an Ending

bankruptcy is an ending

Society has attached a great deal of stigma to bankruptcy. This has made everyone think of it as only the absolute last resort when all else is lost. This stigma makes bankruptcy feel like some kind of awful ending after you’ve struggled for years to stay afloat even though a mountain of debt has been slowly dragging you down. This is NOT the way to think about bankruptcy! You’ll be in a much better place psychologically if you think of bankruptcy not as an ending, but as a beginning. It is the beginning of you taking back control of your finances. It is the beginning of restoring and rebuilding your credit. It is the beginning of your journey towards a much brighter financial future. The way you think about things matters a lot. Think about bankruptcy as a beginning and that will put you in the right frame of mind to make the most of your second chance.

Myth #2: Bankruptcy is a Failure

bankruptcy is a failure

Are there people who end up filing for bankruptcy because they indulged poor spending habits over too much time? Yes, of course there are. But it’s simply wrong to think that everyone who declares bankruptcy must be irresponsible. All it takes is a major medical crisis or series of medical emergencies to find yourself unable to keep up with payments. Health insurance is great, but rarely pays for everything when it comes to a major illness or chronic condition or accident, saddling you with unmanageable debts. As a matter of fact, medical expenses are the number one cause of bankruptcy, followed by job loss, excessive credit card use, and divorce/separation. Sometimes life throws you such a curve that bankruptcy is actually the most responsible thing you can do for your financial future!

Myth #3: Bankruptcy Ruins Your Credit Forever

bankruptcy ruins your credit forever

The effect of bankruptcy on your credit score actually varies widely depending on the details of your particular situation. If your credit score was already tanking, filing for bankruptcy might actually cause it to improve when the discharge of included debts is complete. After all, if you have roughly the same income as before, then your debt-to-income ratio will be much better than before. In other cases, bankruptcy does lower your credit score further. And yes, the bankruptcy stays on your credit card for 7-10 years for all potential lenders to see when they pull your credit report, but it will be only one factor of many that they look at. There’s a wide misconception that bankruptcy automatically prevents you from getting new credit or taking out new loans. Not necessarily! In fact, there are plenty of lenders out there who specialize in helping bankruptcy customers get the credit they need. Of course, you will likely have to settle significantly higher interest rates than people with excellent credit and no bankruptcies, but the situation is not nearly as bad as many people seem to think.

Myth #4: You Lose Everything in a Bankruptcy

loose everything

Some people think that when you declare bankruptcy they’re going to take everything you own. This is because a Chapter 7 bankruptcy is also called a “liquidation” bankruptcy. Yes, the bankruptcy attorney can take your property and sell it off to pay some of your creditors at least some of what you owe them. In many cases, people filing for bankruptcy don’t have a lot of property that would be even be eligible for liquidation because it is exempt. Exemptions vary from state to state, so you’ll want to check your state’s bankruptcy laws. For the most part, you will not have to worry about keeping your home, your car, your retirement fund, or your personal possessions (household goods). The better way to think about bankruptcy is that it is a way for you to protect most of your property.

Myth #5: You Can’t Get a Car Loan in Bankruptcy

car loan impossible

Many people think you’re automatically disqualified from getting a car loan when you have an open bankruptcy. Many also think that even after your bankruptcy has been discharged that car lenders won’t even consider lending to you for at least a couple years. While both of these scenarios may be the case with some traditional lenders, there are many specialized lenders who have specific programs designed especially for bankruptcy customers. As previously mentioned, you’re probably going to pay a higher interest rate, but you can definitely get a loan. This is good news for people who declare bankruptcy and then suddenly discover they need to replace their car. So not only  you can get a car loan while in bankruptcy, but there are many benefits of getting a bankruptcy car loan! To name a few: restore your credit, get out of a bad car loan, drive a better car and much more.

Myth #6: Filing Bankruptcy is Expensive

filing bankruptcy is expensive

The actual cost that the bankruptcy court charges you is not a lot of money. In the Southern District of California, the fees are $335 for a Chapter 7 and $310 for a Chapter 13. However, this does not include the cost of having a bankruptcy lawyer you help you – which is definitely recommended as it can be a complicated process to understand and do on your own. Attorney fees do vary from market to market, but in the Southern District of California, the fees typically fall within a defined range. The range of what attorneys charge for a Chapter 7 bankruptcy can be from $1,000 to $1,600, with the average being $1,560. A Chapter 13 bankruptcy is more complicated, so the range can be from $3,300 to $5,000. These figures may sound like a lot, but when you consider that you’re going to get rid of many more thousands of dollars of debts, it’s really a small price to pay to regain control of your financial life.

Myth #7: It’s Hard to Find a Good Bankruptcy Attorney

bankruptcy attorneys myths

For the most part, bankruptcy attorneys are no less and no more scrupulous than most attorneys. There are what’s known as “bankruptcy mills” who are all about handling as high a volume of cases as possible. In these firms, paralegals are doing most of the work and you might not even see the actual attorney handling your case until it’s well underway and time for the meeting with creditors. This type of bankruptcy law firm is not scamming you, but they definitely aren’t going to give you the kind of personal attention you deserve when going through a stressful process. Anyplace that treats you more like a case number than a person is one to avoid. Go with a small firm or solo bankruptcy attorney who is willing to sit down with you, talk you through the process, answer your questions, and wants to understand your particular needs and situation. Day One knows some of the best bankruptcy lawyers and strongly recommends working with any of the individuals or firms listed on our recommended bankruptcy attorney page. Please read our article on how to choose a bankruptcy attorney to fit your needs.

Myth #8: Bankruptcy Eliminates All Your Debts

eliminate all debt

This is a myth many people believe, but the answer is definitely NO – bankruptcy will not make ALL your debts go away. There a number of types of debt that are automatically disqualified from being included in bankruptcy, including back alimony and/or child support, student loans (except in rare cases), some back taxes, and any fines you owe from violating laws are among the debts that will not be included in your bankruptcy. There are also some debts you won’t want to include because you want to keep the property linked to them, like your mortgage and your car loan. In some cases you’ll want to sign a “reaffirmation” agreement with those lenders so they know you’re committed to keeping up your payments on those debts because you need a place to live and a car to drive!

Myth #9: Bankruptcy Ruins Your Spouse’s Credit

bankruptcy ruins spouses credit

If you’re married, both spouses do not have to file bankruptcy. If one spouse has run up $60,000 in credit card debt only in their own name, that spouse can declare bankruptcy individually with no repercussions on the other spouse. In other cases, both spouses will want to file a joint bankruptcy together. Either way is fine depending on your circumstances, but being married doesn’t mean you both have to file, or that one spouse filing ruins the other spouse’s credit.

Myth #10: Bankruptcy is a One-Time Option

one time option

Filing for bankruptcy once doesn’t mean you’re forever barred from doing it again. But there are some limits in order to keep people from becoming serial bankrupters who are just taking advantage of the system to live extravagant lifestyles by accumulating debt and then declaring bankruptcy. If you file for Chapter 7 bankruptcy, you will have to wait a full eight years before you can do it again. If you file a Chapter 13, you have to wait at least two years to do another one. If your previous bankruptcy was a Chapter 7 and you decide to go with a Chapter 13, you can do that in just four years after a Chapter 7. These laws were changed back in 2005 to encourage wealthier people to move towards Chapter 13 because more debts get paid back in a Chapter 13 bankruptcy. A Chapter 7 followed by a Chapter 13 is sometimes called a Chapter 20. If your previous case was a Chapter 13 and you want to go for a Chapter 7, you’ll have to wait six years after your Chapter 13.

Myth #11: Everyone Will Know You Filed for Bankruptcy

everyone will know

Yes, there was a time when it was fairly common for local newspapers to mention names of people who filed for bankruptcy. There are few newspapers who still do it (very few, luckily). It seems like filing for bankruptcy should be your private business, right? Unfortunately, because it’s a federal court proceeding, it is a matter of public record. This is why you might notice you suddenly start getting lot of mailings for debt relief programs or credit card offers or offers for other kinds of loans. There is a whole industry that has developed around serving bankruptcy customers, some of it good and some of it bad, and they all have access to your mailing address through public domain records.

Myth #12: Filing Bankruptcy Could Get You Fired

bankruptcy employment risks myth

Thank goodness this one is totally a myth! Now, there may have been a time when some employers were worried that someone who declared bankruptcy would be in such dire financial straits that they might steal from the company. To prevent that from happening, there is in fact a law about it. Federal law (11 U.S.C. Sec. 525) prohibits any employer from discriminating against you because you filed bankruptcy. In reality, this isn’t something that’s going to happen. There are very few cases where that law has to be invoked – but it’s there if you need it!

No that you know the common misconceptions about bankruptcy, you may be closer to a decision if filing for bankruptcy is the right choice for you. We recommend seeking help of a professional bankruptcy attorney to determine if you should file or what type of bankruptcy is right for you.

There are a lot of misconceptions out there about bankruptcy. We hope that after reading this article you have a better understanding about bankruptcy and what is and what it is not. Let’s set the record straight with 12 bankruptcy myths busted. Myth #1: Bankruptcy is an Ending Society has attached a great deal of … Continue reading “12 Bankruptcy Myths Busted”