Getting New Debt In Chapter 13 Bankruptcy | VAL Blog

How To Get New Debt While Going Through Chapter 13 Bankruptcy

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Millions of bad credit auto loan consumers have gone through a chapter 13 bankruptcy. After going through such an experience, the thought of acquiring new debt might seem a bit scary. Fortunately, consumers don’t have to be scared to get a loan after they’ve had a bankruptcy.

There is no doubt that bankruptcy is something that most consumers would love to avoid. Nobody actually wants to have a bankruptcy, but in many cases, it’s the only way out of debt. Some people started a business, and shortly after, their business went under, and their failed business took their good credit along with it.

Some people just end up accumulating a massive amount of debt, and eventually, the interest becomes too high, and they lose the ability to pay off the debt. There are endless reasons why people file for bankruptcy, and it’s nothing to be ashamed of.

While many consumers think bankruptcy is a one-way street to credit hell, it’s really not as bad as they’re led to believe. However, it can be very difficult to get financing after filing for bankruptcy.

Considerations for Acquiring New Debt after Bankruptcy

Many consumers believe that it’s impossible to get new debt while still in the process of bankruptcy. There is no doubt that it’s not an easy thing to do, but if you’re wondering if it’s possible, then the answer is yes. To obtain new debt while filing bankruptcy, you must get approved by the BK trustee.

When deciding if you should be approved for the new loan or not, several factors are taken into consideration. For starters, you will need to have a history of paying your bankruptcy payments on time.

Another factor that is considered is whether or not you’re trying to get business or personal credit. They will also want to know why you want to take on new debt. The impact that the new debt has on your ability to pay your bankruptcy payments is another consideration.

Chapter 13 Plans and Consumer Credit

If you’re trying to get new debt, then there is a good chance that you’re seeking consumer credit. This is the common type of credit that consumers obtain when getting a loan for a vehicle or home. Unfortunately, if you’re trying to obtain consumer credit, then you’ll probably have a very difficult time convincing the court or trustee to approve your credit request.

To have even a small chance, you would need to prove that you need the credit for special circumstances or an emergency. What you definitely don’t want to do is go behind the back of your trustee or the courts and sign for a loan.

If you don’t get permission before signing for a loan, then there is a good chance that your case will be dismissed, and your bankruptcy will be unsuccessful. Even if you were planning on trying to get a loan without permission, it’s very unlikely that you would be able to find anyone who will allow you to sign for a loan.

If you’re serious about getting your loan approved, then you need to prove that the loan is needed for a special situation or emergency. Even if you manage to get the loan approved, it will come with certain restrictions. The maximum monthly payment and interest rate can only be decided by the judge.

For Emergencies

The majority of emergency circumstances will not leave you with enough time to get approval from your trustee. If you really need the money for an emergency, then your trustee won’t be expecting you to call them first. An emergency situation might involve a medical event, or it could be the need to protect your car or home from a catastrophic disaster.

For Special Circumstances

If you’re trying to obtain new debt, then you might be wondering what special circumstances could allow you to gain approval from your trustee. When you have enough time to gain approval from your trustee and really need the money, there is a chance that your trustee will approve a new loan.

However, the trustee must genuinely feel that you need the loan. For example, special circumstances might include the need to replace your vehicle. If your only form of transportation just broke down, then you need a new vehicle to continue your employment.

In such a scenario, you might get approved for a new loan because the trustee should understand that you need a vehicle to get to work. If you cannot get to work, then you have no way to make money and pay what is owed to your bankruptcy. Appliance replacements and vital home improvements are other special situations.

Trustee Considerations

When you request approval for a new loan, your trustee must make several considerations. They will need to consider if you really need the loan money before the bankruptcy is finished. If it’s concluded that you can wait until after the bankruptcy, then there is a good chance that you won’t get approved.

The trustee must also consider how the new loan will affect your bankruptcy situation. The trustee must determine if the new loan will prevent you from being able to fulfill your bankruptcy obligations. Your trustee will need to find out if it’s a secured or an unsecured loan.

If you’ve made the decision to take on new debt, you need to sit down and determine if the debt will stop you from paying your bankruptcy payments. If you believe that you have a genuine need to take on new debt, then you can call your trustee and set up a meeting.

Getting Financed and Finding a Lender

Regardless of why you need it, getting approved for a car or home repair loan can be very difficult. Most consumers have the most trouble finding a reputable lender.

However, most consumers don’t know where to start looking. Unless you’ve been approved to acquire new debt, most lenders will never consider your application. You must have some sort of letter that is signed by the bankruptcy judge.

Lenders need this letter of approval because it’s how they protect themselves from legal trouble and financial losses. Even if you can get a letter of approval, you might have another problem. The lender that you’ve found might not agree to the loan terms that have been set by the judge.

What to Do Next

Maybe you have already obtained a letter of approval. Unfortunately, after you mention the word bankruptcy, most lenders will show you the door, so the outlook might seem grim. However, the solution to all of these problems is Valley Auto Loans.

We can match you with a bad credit car dealer, and once you accept our assistance, your chance of getting approved for an auto loan will increase dramatically. Our specialty is helping consumers who have a poor credit history.

We also specialize in helping consumers who’ve gone through prepossessions and bankruptcy. We can help match you with a local dealer, and you don’t have to worry about getting judged based on your bad credit history. To get started, all you need to do is fill out and submit the credit application, which is accessible here on our website.