Auto Loans for Bad Credit after Bankruptcy

Bankruptcy with Bad Credit Auto Loan

Hey, Joanne here,

I have had numerous clients who needed a vehicle while still in bankruptcy or have come to see me for an auto loan after the fact. Not only are they in need of a vehicle, they are also looking to re-establish their credit. People who have filed for bankruptcy can qualify for an auto loan. Ideally, waiting until you are discharged would be preferred however, you can get approved for an auto loan three months into the bankruptcy as long as the monthly obligations to the trustee are being met. In this situation, the lender’s look for strong work stability in length of employment, income, and previous credit history pattern.

About Bankruptcy

Bankruptcy statistics show Canadian consumers are piling up debt faster than the growth of the economy according to Bankruptcy Canada. Every year 100,000 Canadians file for personal bankruptcy or consumer proposal. There are three major reason’s that cause Canadians to file for bankruptcy. The first is job loss or reduced income. Obviously, losing your job or source of income will affect your ability to make your monthly obligations. Even having your income reduced will put you in a vulnerable situation. It can cause you to miss payments where interest will accrue and set you back further. The second reason is divorce or marriage separation. As a couple, there are shared debts with usually 2 incomes however, when a couple enters into a divorce, each now have to pay fully for their own living expenses on top of their previously shared commitments. This increases your debt to service ratio which is your level of income to level of debt. The third reason is medical illness. The inability to stay employed due to injury or illness. Even those who receive medical insurance will often only receive a portion of their wages. The average time for bankruptcy before receiving a discharge is 9 months.

About A Consumer Proposal

A Consumer Proposal is the alternative to a bankruptcy. What is a consumer proposal? it is a contract that is negotiated by a consumer proposal administrator on your behalf, to re-pay the unsecured debt owing. It is an easy way to repaying your creditors. You only re-pay a portion of the full amount and the creditor’s will agree to right off the rest of your debt. It is an alternative to keeping your assets and can settle your debt through a monthly payment. The length of the proposal is usually 5 years. One can qualify for a bad credit auto loan six months into a consumer proposal so long as monthly obligations to the administrator are being met.

These are two options for those whose debt are unmanageable.