Can I buy car after filing Ch. 7 bankruptcy?

Justin HarelikDear Bankruptcy Adviser,
Can I buy a car after filing Chapter 7 bankruptcy but before the case is closed? I will be filing soon and I know I can't keep my current automobile, but I must have a car.
-- Lenny

Dear Lenny,
In the past, I would say you definitely could not buy a car right after filing bankruptcy. Most auto lenders wanted to see the bankruptcy filer re-establish credit before approving an auto loan. Now, lenders are more desperate than ever to finance cars. While you may not be able to get the car until you get the bankruptcy discharge notification, buying a car after bankruptcy is a viable option.

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The problem with getting a vehicle immediately after filing your case is that your debts are not officially eliminated yet. The bankruptcy filing halts creditor collection activities, but the mere filing of the case does not mean all your debts are gone. You still need to attend your meeting with the court-appointed trustee and give creditors time to object to your case or the elimination of the debt owed to them. The entire process generally takes 120 days from the date of filing until your case is closed.

If you're planning to buy a car, you'll find the best rates on an auto loan at

However, auto lenders are getting stuck with a lot more inventory than before. Cars are lasting longer and certified preowned vehicles are almost like new. So car lenders are a bit desperate to get inventory off the lot. You definitely have a better chance to finance a vehicle even with bad or no credit.

This does not mean you are going to walk into a new car showroom and buy the latest model, but you can likely buy something soon after filing. Many of my clients tell me they've received many solicitation letters from car lenders offering good deals on an auto right after the case has been filed.

You may begin receiving car loan advertisements right after filing. Contact a couple of the lenders and ask whether you are able to be approved before receiving your bankruptcy discharge paperwork.

If you're looking for a good rate on a car loan, check out the offers at

While you likely do need a car right away, you may be able to find another vehicle to use for the 4 months that your case is open. You can set up a used car purchase to occur within days of receiving the notification that your case is closed and your debts are gone.

Good luck.

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