Hold onto car when filing bankruptcy

Dear Terry,
I recently filed Chapter 7 bankruptcy and have decided not to keep my car because I'm upside-down on the loan. Although I read that people who file bankruptcy can get a car and a mortgage, how hard will it be? How long before the car company picks up the car? Is leasing a better option than buying? I don't want to end up in worse shape. Please help!
-- Melissa

Dear Melissa,
Don't be fooled into thinking that the moment your debts are discharged, getting new credit will be easy or cheap. While there are lenders who will give you a car loan, the interest rate and terms will likely be brutal. It's doubtful that you will be able to lease a new car, either.

If there's any way you can hang onto the car you've got, I would recommend that. If you have stopped making payments on the car, you can expect the lender to repossess it anytime you're two or more months behind.

This week:

• Auto-industry friends can help you save • Is dealer financing my best option? • Do dealers routinely botch contracts? • Should I dump my car after bankruptcy?

If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter.