The bankruptcy blog

When you need to finance a car purchase with a bankruptcy car loan, it is important to pay attention to the timing of when you apply for the loan.

If you haven’t yet declared bankruptcy but are about to, you should wait until after you have filed your bankruptcy before applying for bankruptcy car loan. When you’re about to file for bankruptcy, many lenders will see your heavy debt load and will likely to reject your loan application. But you’re also not yet eligible for a bankruptcy car loan until after you’ve filed your bankruptcy. That’s why waiting to apply for the loan until after you file for bankruptcy makes the most sense.

The lenders who specialize in bankruptcy car loans want to see you’re on the path to making a fresh start, which is what filing for bankruptcy does for you. Once your case has been filed and is in the process of moving forward, that’s when bankruptcy lenders can start working with you.

Related post: Bankruptcy Car Loan Timing

If you’ve declared bankruptcy and are trying to rebuild your credit through a fresh start program such as a bankruptcy car loan, you’ll probably be wondering why the interest rates are so high on this type of loan. It’s all about how risky the lender thinks you are in terms of paying back the loan.

Many lenders won’t even consider giving you a loan if they see a bankruptcy in your credit history. To them, it’s just too risky. They see your bankruptcy as an indication you’re more likely than other customers to default on the loan. These “risk-adverse” lenders are too worried they won’t get their money back.

Then there are lenders who take a more positive view of the bankruptcy on your credit history. They see you’re making a fresh start, trying to do better, and are willing to consider taking a chance you with a loan. But the big-picture data out there still says bankruptcy customers are more likely to default on loans than non-bankruptcy customers. In other words, you’re still viewed as a higher-risk customer, and that’s why the interest rates are higher on a bankruptcy car loan.

Higher interest rates are the price you pay for being a riskier kind of customer for a lender but can also be a life-saver when you need to finance a car purchase and many lenders won’t even give you the time of day.

Related post: Bankruptcy Fresh Start Program: The What And Why

A bankruptcy filing stays on your credit report for as long as 7-10 years. While having most or all of your eligible debts wiped away or at least caught up on feels great, that bankruptcy sitting there on your credit report is a big red flag to many lenders when you try to get a new loan or line of credit. How are you supposed to improve your credit history if you can’t take on any new debt? It can feel like you’re stuck. But a bankruptcy car loan is something that could help.

While many lenders won’t work with you because of the bankruptcy on your credit report, there are other lenders out there who understand you’re making a fresh start and are willing to consider you. If you need to finance the purchase of a vehicle, a bankruptcy car loan might be the right option that allows you to not only get the vehicle you need, but also to make on-time payments on the loan that will be reported to the credit bureaus to show responsible use of credit and better managing your debt.

While the terms and rates on a bankruptcy car loan won’t be as good as you’d get if you didn’t have a bankruptcy on your credit report, it’s a pretty small price to pay for the chance to not only get the car you need but also start rebuilding your credit.

Related post: Bankruptcy Fresh Start Program: The What And Why

Rebuilding your credit score after bankruptcy isn’t difficult, but it does take discipline, starting with paying your bills on time every month—especially those that report payments to the credit bureaus, like utility bills, loan payments, credit cards, and so on.

What really helps your credit score improve is when you build up a history of responsibly handling loans, lines of credit, and other kinds of debts. The catch-22 here, however, is that with a bankruptcy on your credit report, it can be difficult to get a new loan or line of credit from many lenders.

Fresh start programs are designed to help you obtain a new loan, such as a bankruptcy car loan, so you can start building up a new credit history and improving your credit score.

Related post: Bankruptcy Fresh Start Program: The What And Why

If you’re going through or have recently been through a bankruptcy filing, you’ll likely start hearing the phrase “bankruptcy fresh start program” and wonder what it really means.

Bankruptcy laws were written in order to help people get relief when their debts have grown to unmanageable levels. The bankruptcy process helps you pay off some debts, get caught up on others, or even completely wipe out some or all of your debts. Bankruptcy lets you make a “fresh start” with little or no debt.

The problem is that a bankruptcy filing shows up on your credit report and stays there for a good 7-10 years, and it’s considered a big red flag by many lenders when it comes to getting a new line of credit or loan. But there are lenders who understand that bankruptcy isn’t an ending but a beginning of being in a better position financially moving forward, and a fresh start program can be a way to start rebuilding your credit.

A bankruptcy fresh start program typically refers to a way for you to get a loan or line of credit in spite of your bankruptcy through a lender willing to work with bankruptcy customers. The terms and interest rates you get through fresh start programs won’t be as good as regular loans and credit to non-bankruptcy customers, but at least you’ll have a higher chance of qualifying for the credit you need, such as a bankruptcy car loan to finance the purchase of a vehicle.

The catch-22 of filing bankruptcy is that the way you restore your credit is by making payments on time every time on your debts, but the red flag of a bankruptcy on your credit history can make it very difficult to take on new debt so you can do better. That’s when a bankruptcy fresh start program might be the best way to start rebuilding your credit.

Related post: Bankruptcy Fresh Start Program: The What And Why

If you’ve decided you need to file bankruptcy and have begun to search for a reputable bankruptcy lawyer to help guide you through the whole process, you might be wondering what bankruptcy attorney qualities you should be paying attention to and looking for in order to have the best experience possible.

It’s important that you feel totally comfortable with the bankruptcy attorney you hire. Are they personable? Do they show a genuine interest in getting to know you and understanding your situation? Are they clearly committed to getting the best possible outcomes for you? How are their customer service skills? You want to be treated with respect and dignity and not like you’re just another case number they have to deal with. And if English isn’t your first language, make sure the bankruptcy lawyer you hire provides bilingual services for whatever language you wish to use.

If it looks like a Chapter 13 filing is the type of bankruptcy you should file, then you definitely want to ask about the one of the most important bankruptcy attorney qualities of all, which is their Chapter 13 success rate. Not all Chapter 13 cases are successful. In fact, the national average is that only 33% for Chapter 13 cases being brought to a successful conclusion. In part this is because too many people try to file on their own. And it’s also because Chapter 13 cases last between 3–5 years, which means a long period of time during which things might not go well with your repayment plan. But if you work with good bankruptcy lawyer, the Chapter 13 success rates go up to at least 50%. Look for a bankruptcy lawyer whose Chapter 13 success rate is better than that national average and you’ll have a higher chance of reaching the outcome you desire.

Related post: Choosing a Bankruptcy Lawyer

When you realize you need to file bankruptcy, a question you’ll like have is how much you’ll have to pay for filing bankruptcy. There’s a court fee everyone has to pay, and then you’ll also have to pay separately for cost of a bankruptcy attorney to handle your case.

The current cost of filing bankruptcy in terms of the court-required filing fees in southern California as of December 1, 2020 are $338 for a Chapter 7 bankruptcy and $313 for a Chapter 13 bankruptcy. The bankruptcy attorney fees are over and above the court fees and are paid directly to the attorney or their firm. The cost of a bankruptcy attorney, while it can vary, tend to fall in a fairly tight range. The average fee in California is around $1,560 for a Chapter 7 case (see this article on Lawyers.com). Chapter 13 cases, however, depend on how complex your specific case is, so there’s a wider range, with the average fees falling in the range of $3,300–$5,000 (see this article on Lawyers.com).

Low-income folks who make less than 125% of the federal poverty level might qualify for free legal assistance to file bankruptcy. Every state has legal aid organizations to help with this. See a listing of State Legal Aid Resources at FindLaw.com. In southern California you can check with the Legal Aid Society of California or the San Diego Volunteer Lawyer Program.

Related post: Choosing a Bankruptcy Lawyer

People who are looking for a reputable bankruptcy lawyer often wonder whether or not they should pay attention to customer reviews. The short answer is YES! But, you also have to make sure those reviews are coming from a source you can trust.

The thing you want to keep in mind is that the website for any bankruptcy attorney or firm is going to put up lots of customer “reviews” that really testimonials, meaning they are selected by the lawyer or firm because they say wonderful things about them. You’re not going to find any negative customer reviews on the website of the practice.

What you want to do is get actual customer reviews from independent sites like Google and Yelp. Those sites have done a lot of work in recent years to stop fake reviews, so you’re going to get a better pictures of what people really think about that particular bankruptcy attorney or firm. Review sites also let you see the bigger picture in terms of how many reviews they’ve received and what their average score or ranking is, which can be very helpful in narrowing your search for a good bankruptcy lawyer. Other sites that post customer reviews of attorneys and law firms include Avvo, Lawyers.com, and FindLaw.com.

Related post: Choosing a Bankruptcy Lawyer

If you decide filing bankruptcy is right for you, then your first task is finding a good bankruptcy attorney who can guide you through the process. Bankruptcy laws are complicated, and you need an expert to advise you every step of the way. But not all bankruptcy attorneys are created equal. Here’s what you need to know about the different kinds of bankruptcy lawyers.

Your best bet is focusing on solo practices in which the attorney specializes in handling bankruptcy cases, or a small practice where one or more of the lawyers is focused on bankruptcy law. What you’d want to avoid the kind of practice that is so focused on speed and volume you might not even meet the attorney face-to-face until the process is well under way! Paralegals will likely handle all the starting details and you might feel more like a case number than a person. In other words, you’re not getting the individualized care and attention you deserve. After all, filing bankruptcy is a big decision and you want a bankruptcy attorney who works with you on a personal basis to understand your needs and gives you their best professional advice and guidance.

When it comes to finding and hiring a reputable bankruptcy attorney, keep your search as local as possible so you don’t have a long commute to meet with your lawyer. In the San Diego area, check our attorneys page for bankruptcy lawyers we know do great work for their clients.

Related post: Choosing a Bankruptcy Lawyer