Let's commence with a brief explanation of chapter 7 bankruptcy. Chapter 7 bankruptcy involves the complete discharge of unsecured debts. This bankruptcy is also known as a ""liquidation"" bankruptcy. This procedure will relieve you of credit card debt, personal loans, and medical expenses.
You will collaborate with a lawyer who will draft the court documents. Once the court has received the petition, an executor will be appointed. This administrator is essential if you wish to obtain a loan during chapter 7 bankruptcy. During the bankruptcy procedure, they are your team of choice for any financial questions.
Regarding an auto loan, you will have the option to reaffirm the loan in order to retain your car. However, depending on your circumstances, this may not be the best choice for your auto loan. If you discover that you are upside down on your auto loan (owing more than the car is worth), you may wish to consult with an attorney about allowing repossession and obtaining a new auto loan. It may be advantageous for you to do so, but you should seek the advice of your bankruptcy team to ensure that you can obtain a replacement vehicle for the one that will be repossessed.
Moreover, your bankruptcy team should be familiar with your entire financial portfolio so that they have a decent idea of what you can and cannot do legally. During chapter 7, they may also advise you on what you can comfortably afford for a monthly car loan payment.
If your attorney and trustee believe that you will be able to obtain a loan, the trustee must draft a letter of permission and submit it with your court filing. In addition, you will need to provide this letter to prospective auto lenders.
You will need to locate an auto dealer or auto consultant who provides programs for bankrupt individuals. Not all dealers provide this service, so you may need to search for a local dealer who works with Chapter 7 bankruptcy filers.
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