Can I get a car loan during bankruptcy?

My finances are a mess and I was forced to file for bankruptcy recently. I need to buy a car now, but will anyone offer me a loan?

Answer
Sorry to hear about your situation; it can be really hard.
Bankruptcy is a legal process by which you admit you are unable to keep up with your debt payments and ask for help from a court. In doing so, a borrower greatly reduces their options to take on new debt, including car loans. Before shopping for a financed car, make sure it’s an absolute necessity.
Depending on where you are in the bankruptcy process, the judge or bankruptcy administrator can disable your purchase, or at least make it harder by making you redirect your down payment to pay off your existing debts.
Assuming a car is a necessity and you have cleared it with the judge or bankruptcy administrator, the process is similar to obtaining a car loan outside of bankruptcy:
  • Find the right car.
  • Don’t be extravagant; get an affordable vehicle.
  • Shop for the right lender. Be specific in searching for lenders who specialize in loans for borrowers in bankruptcy.
  • In addition, be open and transparent about what you need and would like to do with the court or administrator of your bankruptcy.
Like lenders, when there is a problem, your bankruptcy administrator hates surprises. Unlike lenders, they have many more ways to create misery for you if you haven’t told them everything they ought to know. Jerry offers numerous resources on understanding bankruptcy regarding car insurance so you don’t have to go through this alone. Check out our questions forum for more advice about bankruptcy.
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Jim Donaher
Answered on Aug 09, 2021
Jim Donaher is a freelance writer and manager with over 35 years' experience in the insurance, banking, and investment management businesses. He provides expertise on a range of topics and is able to explain complex industry information in layman's terms. Jim is the author of two books, including Call Him, He's Home: A Guide to Prayer for Regular People and Then Larry Smiled, a novel about life, death, accountability, and salvation. Taormina, Sicily is his happy place!
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