How To Refinance Your Automobile While In Bankruptcy

Saturday, May 21st, 2011 at 9:16 pm

This is a guest post by Kevin Craig who is a financial writer associated with various finance related Communities. He has been providing advice on debt management since 2007. With his advice, many people are now living a debt free life.

The impact of Bankruptcy is severe on credit score of an individual and it becomes nearly impossible to qualify for an auto-refinancing program. After the expiration of bankruptcy term one requires to appeal to the bankruptcy court to obtain a permission for auto-refinancing.

Moreover, the blemished credit report is one of the reasons for not qualifying for any other loan program. These lenders typically make a hefty charge for giving loan to a bankrupt person which sometimes exceeds 25%.

But this is not what we want from a auto-refinancing program.

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One of the worrying aspects of bankruptcy is that it stays on the credit report for about 10 years even after his property gets liquidated to compensate his lenders. Soon after filing bankruptcy, a person finds his credit score going down by almost 200 points. However, it depends on the severity of this particular case.

On the contrary, we also see that some people raise their credit score after bankruptcy. It is because after bankruptcy most of them make timely payment and discard additional credit offers, so naturally it plays a positive role in hiking their credit score.

Chapter 7 is a process by which the debtor’s property is liquidated to reimburse his creditor. But as it is a very fast process, Auto-refinancing can hardly be possible within the course of a chapter 7 bankruptcy. Therefore, it is wise to apply for auto-refinancing after the bankruptcy procedure is over.

However, one can apply auto-refinancing while he is going through chapter 13 bankruptcy. Here, off course one has to put a valid argument before the court in order approve the proposal for auto-refinancing. One can appeal to the trustee also and let them know about his concern and the trustee may give ascent to a debtor to get a refinanced loan with lower monthly payment option.

With regular on-time payment, when the credit score rises up 720 points after 2-3 years of bankruptcy, then things may get easier for one to get auto-refinancing benefit. There are some on-line application procedures which can be accomplished with much ease and comfort. If you try to refinance your truck or car, you can get the best interest rate from a refinancing company. For that purpose you can search on the internet and locate the company offers the best deal.

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However, there are some basic eligibility criteria that one need to be fulfilled.

The candidate must be 18 years of old or above.
All his debt should be discharged through bankruptcy filing.
He has to be an U.S citizen.
If he has any credit account, it should be in an up-to-date status.

So, if you are going to refinance your automobile during or after bankruptcy, it is wise to take the assistance of a financial adviser. You might get the help of a finance adviser once you enroll in an auto-refinance company. They will offer you refinance opportunity at bad credit or even with bankruptcy. You can file the application form without paying any fees.

However, before moving for an auto-refinancing application, you should get an idea about the value of your car. NADA trade value is the set guidelines for most banks to determine how much your car costs. Provided your car’s valuation exceeds your current pay off, you could easily borrow money against your car. But if the value is lower, then it would be troublesome in refinancing your automobile.