The bankruptcy blog

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

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 finding bankruptcy car loans, we know your credit score is already not good. But because you’re in bankruptcy or recently had one discharged, we also 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

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 divide it by your income of $2,400 and get .14 (rounding down), then move the decimal point over two 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 loan payment 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 Financing Guidelines

At Day One Credit, we take great pride in helping people who have declared bankruptcy get the car they need by finding bankruptcy car loans for them. 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 find the loan that best fits 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 can 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 is simply not helpful.

The other piece of good news about working with Day One Credit to find a bankruptcy car loan is it’s one way to start rebuilding your credit after bankruptcy. This pathway to restoring your credit means finding a new loan and making on-time payments. Some 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!

There are lending programs in our network that don’t require any down payment, and we will also help you find an 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!

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

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 finding 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?

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

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 may NOT be 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 could be 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 be 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 Bankruptcy Car Loan

One way 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 through Day One, they will all be trying to get your business, and that’s the kind of competition that helps ensure you’ll find the loan that fits 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 find 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 potential benefits to be gained by working with Day One to find a bankruptcy car loan. Besides helping you get your credit back on track, you may be able use it to get out from under a bad car loan. If you owe more on your vehicle than it’s worth, we may be able to help you get out of your upside-down or underwater car loan and get 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 are there. If not, contact us and we’ll be happy to talk to you!

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?

Filing for bankruptcy might be 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, work with a qualified bankruptcy attorney to determine if you should file. If you do file, then you can start working with lenders who specialize in bankruptcy car loans. They may even be able to get you an interest rate better than trying to get a traditional loan before you file. This is because some lenders are only going to look at your low credit score and 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

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. One 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.

Beware of a BHPH car loan.

BHPH is an acronym that stands for “buy-here-pay-here” car dealerships, meaning they offer what is called “in-house financing.” Be sure to find out if it is a reputable dealer! We’ve heard that some BHPH dealerships are notorious for saddling customers with horrible loan terms. At Day One, we rely on a network of 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 may 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. We recommend never buying 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

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.

It might also make sense to purchase 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 contracts 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

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 to find a bankruptcy car loan. Our network of 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!

Here’s a scenario that happens more often than you might think: You’ve decided to declare bankruptcy or have already filed for bankruptcy and then your car dies. When this happens, it often puts people in a panic. How in the world can you get a car when you’re also dealing with a bankruptcy? Take a deep breath and relax, because Day One Credit can help you find a bankruptcy car loan. However, it’s important to keep in mind the right timing when you’re seeking a car loan after bankruptcy.

Chapter 7 Bankruptcy Car Loan Timing

Let’s say you’re about to file for a Chapter 7 bankruptcy (also called a “straight” or “liquidation” bankruptcy) when you discover you also need to replace your car. What should you do? You know your credit has been spiraling downward, which is why you’ve decided it is time to file for bankruptcy. In this case, it might make sense to apply for a car loan until after you’ve filed for bankruptcy. If you apply for a car loan before declaring bankruptcy, some lenders will reject you because of your low credit score and high levels of debt, or might be willing to make a loan but with outrageous terms and interest rates.

But if you wait until after you have filed your Chapter 7 bankruptcy, then you can find a lender that specializes in bankruptcy car loans. This is advantageous because those specialized lenders are more willing to lend to you – they see you’ve filed for a Chapter 7 and know that most or all of your worst debts are going to be wiped away. In fact, this is one situation where you might actually get a better rate on a post-bankruptcy car loan than a pre-bankruptcy car loan. When you are pre-bankruptcy, lenders are only going to see your troubled credit, whereas when you are post-bankruptcy, a specialized lender sees you’re in the process of eliminating debts.

When you’re entering Chapter 7 bankruptcy, Day One can begin helping you find the Chapter 7 car loan you need as soon as you have filed and have a case number. There is literally no reason to wait. Many people just assume you have to wait some amount of time before applying, but this is not true. You can apply at Day One the same day you file for Chapter 7 as long as you have a case number.

Chapter 13 Bankruptcy Car Loan Timing

If you’re planning to file a Chapter 13 bankruptcy, the same overall timing considerations apply, with a couple major differences. You have to wait a little longer before Day One can help you find Chapter 13 car loan. When you file a Chapter 13, you have to create a reasonable payment plan for the debts being included in the filing, and that payment plan has to be confirmed by the bankruptcy court. Unlike the Chapter 7 scenario where you can file as soon as you have a case number, with a Chapter 13 you must wait until you have a confirmed repayment plan.

In addition to waiting until you have a Chapter 13 confirmed payment plan, you will also need to get an authorization from your assigned bankruptcy trustee or judge in order take on new debt. Because having a car is considered essential for most people to maintain employment and the income needed to stay on track with your Chapter 13 payment plan, the request should be granted. Please check first with your bankruptcy attorney before doing anything!

Consult with your bankruptcy attorney about adding the new post-petition debt to your Chapter 13 bankruptcy. If it’s a substantial debt, then it might also be in your best interest to amend your confirmed payment plan to account for the new debt. After all, you don’t want the new debt to throw you off from keeping up with your confirmed payment plan.

If you were in an emergency situation where you had to incur the new debt without first seeking court approval, you may still be able to include it in your Chapter 13 and amend your payment plan after the fact by working with your assigned bankruptcy trustee. The trustee might reject your request. If you’re already behind on your confirmed payment plan, the trustee will question how you’ll be able to take on even more debt. But if the trustee is on board, the motion you file with the bankruptcy court should be approved.

Discharged Bankruptcy Car Loan Timing

There is a widely-held belief that if you’re in the midst of a bankruptcy, you should wait to get a car loan until after your bankruptcy has been fully discharged. It’s easy to understand why so many people think this is logical. After all, once the bankruptcy has been discharged, then you have a much better debt-to-income ratio since your worst debts have been eliminated or brought back up to a good current payment status. In addition, people have also heard that lenders want to wait a full two years after discharge before they will consider making a car loan to you. If you don’t need to replace your car, then you can go along with those scenarios. But what can you do when your car decides to die before or right after your discharge?

The good news is that while some lenders who don’t want to take on any perceived risks won’t give you the time of day, other lenders who have developed programs specifically for bankruptcy customers can make sure you get the car loan you need when you need it. Whether your bankruptcy is about to be discharged or was recently discharged, Day One can help you find the discharged bankruptcy car loan that will allow you to get the vehicle you need.

Day One Bankruptcy Car Loan Timing

All the timing issues around getting a car loan after bankruptcy covered so far in this article have been about when you can apply for a loan. Now it’s time to talk about timing in terms of how long it takes to find a bankruptcy car loan from Day One. This is one of the major advantages of working with us – we’re FAST!

You’ll be able to fill out our online loan application in less than five minutes. And once you’ve submitted your application, you’ll hear back from us in a matter of minutes! What happens in that short amount of time? We quickly review your application and make sure we have the information we need. If we need to clarify anything, we’ll get in touch. When we see everything is good to go, then your application is sent out to our network of lenders. They send their loan offers back to us and we choose the one with the best terms to present to you. Our process works so well because when multiple lenders compete for your business, you win! If you have questions or need additional information, please feel free to contact us !

When you’re in the process of deciding whether or not to file bankruptcy in order to get some debt relief, or if you’ve recently filed, you might start tuning into things you never noticed before. One example could be the phrase fresh start program. In this article you’ll find out what a fresh start programs are and how they can help you make the most of the new beginning filing bankruptcy gives you.

Your Post-Bankruptcy Mission: Rebuilding Your Credit

Filing for bankruptcy can sometimes feel like an ending – the last resort when you’ve accumulated so much debt that you feel like there’s no way out. After all, many people view bankruptcy as some kind of failure, so there can be a lot of stigma around it. But many people are suffering from crushing debts due to circumstances largely beyond their control, such as the unexpected loss of employment, a medical emergency or other life change that threw their financial lives into disarray. Whatever the reasons may be that have brought you to the place where you need to file bankruptcy, it’s much better to think of it not as an ending but as a new beginning. It’s a second chance to get your finances under better control. Thinking of it as a new beginning will motivate you to do the single most important thing you must do after filing, which is to rebuild your credit.

After the stress of filing for bankruptcy, too many people don’t do anything at all. They just wait for the process to be over, but when they do that, they’re missing out on time that could have been spent rebuilding their credit. The day you file for bankruptcy should be the day you start figuring out how to restore your credit. One way to that is through a fresh start program. This is not to be confused with the IRS “Fresh Start” initiative that is specifically geared towards helping people who owe a lot of back taxes to the government protect their property and resolve their tax issues.

A Bankruptcy Fresh Start Program Can Work Wonders

Many people think that bankruptcy does so much damage to their credit that there’s nothing they can do to fix it except wait the seven or eight years it takes for it to drop off their credit report. Not true! No one can put their financial life on hold for that long, and there are lenders out there who understand this and have developed specialized lending programs designed specifically for bankruptcy filers. These are the fresh start programs that help you rebuild your credit, even if they don’t specifically call them fresh start programs.

One way to restore your credit after a bankruptcy is to first and foremost keep up-to-date on your monthly payments for any debts that weren’t included in the bankruptcy, such as your mortgage or car payment. But another thing you can do is get a new loan and make on-time payments each and every month. Here’s where most people fail to take action. They assume there’s no way they can get any new credit with a recent bankruptcy filing. Again, not necessarily true! The whole point of a fresh start program is to do exactly that – extend you some credit in spite of your bankruptcy filing. While many lenders are unwilling to do this, but lenders with fresh start programs are ready to help.

The most important thing to keep in mind with any bankruptcy-related fresh start program is that in order to reap the credit-rebuilding benefits, you have to make your monthly payments on-time every time, so make sure you don’t take on a loan with payments you can’t afford.

How Does a Fresh Start Program Work?

Fresh start lenders are willing to take an extra risk by making loans to bankruptcy filers other lenders wouldn’t consider, but that also means that the interest rate you pay on the loan is going to be higher than normal. Think of those higher rates as a small price to pay for the chance to rebuild your credit so your future will be brighter!

While a fresh start program is geared towards helping bankruptcy filers get new credit, there are still going to be some eligibility guidelines you’ll have to meet. For example, at Day One our lenders want to see a maximum PTI (payment-to-income ratio) of 17% and a maximum DTI (debt-to-income ratio) of 50%. What do those numbers mean? Your PTI is how much of your gross monthly income would be taken up by your monthly car and insurance payment. Your DTI is how much of your monthly gross income goes toward all your various debts. We do not, however, have a minimum credit score requirement. In fact, you could have a score of 0 and might still qualify for a loan Day One finds you.

The most common types of fresh start programs are those that help bankruptcy filers get a mortgage, a car loan or a secured credit card. With a secured credit card, you make a cash deposit to cover the credit limit of the card so the card issuer is not at risk of losing out if you fail to pay the bill. After proving yourself with secured credit card over a period of time, you will eventually be able to get an unsecured card that doesn’t require a deposit. In the case of a mortgage or car loan, there will be more eligibility requirements since those are bigger loans.

Day One’s Fresh Start Program is for finding a Bankruptcy Car Loan

Day One Credit is a bankruptcy fresh start program that helps people find the car loan (and car) they need even though they have a recently-filed or discharged bankruptcy. Many people panic when they file for bankruptcy and soon afterwards realize they need to replace their car. How can they get a car loan when they just filed for bankruptcy? The fresh start program at Day One was designed specifically for this kind of situation. We help each eligible customer find the bankruptcy car loan that will best meet their specific needs.

At Day One we take great pride in sitting down with each customer to make sure we understand their needs as well as ensure eligibility for the lending programs in our network of lenders. Our prequalification eligibility guidelines include the following:

Income. Your minimum gross monthly income has to be $2,200 per month or higher as shown on either W-2 forms from your employer or 1099 forms if you’re self-employed.

Bankruptcy Status. Your bankruptcy must be filed or recently discharged. We can work with you as soon as you get your Chapter 7 case number or your Chapter 13 confirmed repayment plan. We have programs for both open and recently discharged bankruptcies.

Valid Driver’s License. You must hold a valid driver’s license that is not suspended.

Even if you meet those guidelines, there are instances where we don’t recommend going for a bankruptcy car loan, including the following:

You already have a great car. If your current vehicle is newer, has relatively low mileage, is paid off or close to being paid off, then it makes sense to stick with it.

No stable income. If your income is not stable or you know your income is about to drop or your expenses are about to go up (or both).

The cosigner on your car did not file for bankruptcy. You can damage your cosigner’s credit if they did not file bankruptcy with you. You have the right to surrender your car, but your cosigner does not have the same right, and the lender will still go after your cosigner.

The benefits of working with Day One to find a bankruptcy car loan are important to describe. One big benefit is that we have no-money-down options available to most customers. Another benefit is our extensive experience. We’ve been working exclusively with bankruptcy filers for years and know how to make this work for you. Our customers get great results and enjoy being treated like VIPs. We’ve developed a network of experienced lenders who have programs designed specifically for bankruptcy customers, and when they compete for your business, you get a better deal. You’ll also enjoy finding the car you need in our inventory of high-quality vehicles – newer model years in great condition with low miles that will serve you well for years to come.

If you’re ready to make the most of your bankruptcy fresh start, apply now by filling out our short application online and get an initial answer within minutes!