12 Mar Applying for a Car Loan after Bankruptcy
Recently, an article appeared on the Credit & Mortgage Index which suggests that it may not be possible to obtain a car loan following a bankruptcy filing. The author states that “bankruptcy has negative effects on your overall credit history”. The author echoes the traditional thought that bankruptcy ought to be avoided at all costs due to the negative impact on one’s credit.
Unlike this article, I am a bit more optimistic when it comes to credit scores and credit worthiness following a bankruptcy filing. In my opinion, bankruptcy can actually improve a consumer’s credit standing, especially if that consumer filed the bankruptcy case at a time when his or her credit was at a nadir, which is true for many consumers who elect to file. And according to this article by Smart Money, once a consumer has filed for bankruptcy, the Fair Isaacs system for determining credit scores will base the consumer’s score relative to other consumers who have filed for bankruptcy. The result is that a bankrutpcy filer can end up with a very good credit score fairly soon after filing.
Is there anything you can be doing following the issuance of your bankrutpcy discharge to insure that you maximize your credit recovery opportunities, and to make sure that you qualify for the best possible interest rates on car loans and other major financings? Absolutely. Please read this post by Jay S. Fleischman. Jay suggests that you be vigilant with regard to your credit reports following your bankruptcy. Make sure that no old, pre-petition debts are continuing to be listed on your credit reports. If there are older debts appearing on the report, the report should indicate either that the debt was “charged off” or that a “zero balance” is due and owing. Furthermore, a debt can only be identified as “charged off” in the event that the actual charge off occurred prior to the bankruptcy filing.
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