You can buy a car as soon as your bankruptcy is discharged. If you can’t wait until the bankruptcy has been completed, just when you can finance a vehicle depends on the type of bankruptcy you filed, and how far along you are in the process.

Buying a Car after a Chapter 7 Bankruptcy

How Long Should I Wait to Buy a Car after Bankruptcy?A Chapter 7 bankruptcy is considered a liquidation bankruptcy, and it generally lasts around three to six months. During it, any non-exempt property, which could include a car, is sold to pay back your creditors.

Because it lasts a relatively short amount of time, lenders usually require that you successfully complete your Chapter 7 before considering your auto loan application. As soon as it's been discharged, you can typically buy a vehicle.

Make sure that you have a copy of your discharge papers in case the discharge doesn’t get listed on your credit reports right away.

Buying a Car after a Chapter 13 Bankruptcy

Similar to a Chapter 7, you can usually buy a car as soon as your Chapter 13 bankruptcy has been discharged. However, unlike a Chapter 7 bankruptcy, you may be able to purchase a vehicle while the bankruptcy is still open.

This option is only available during a Chapter 13 bankruptcy because the process takes either three or five years. Lenders understand that your transportation needs may change during such a long time period.

The process of getting an auto loan during an open Chapter 13 bankruptcy can take a while. You have to find a dealership that can get you approved and get a sample financing state from them. Then, you have to take that to your trustee for them to file a motion to incur additional debt with the court.

If the court approves the motion, they'll issue you an order to incur additional debt. You can take this back to the dealer to complete the process.

Can You Buy a Car after a Dismissed Bankruptcy?

You’ve heard of a discharged bankruptcy, but what about a dismissed bankruptcy? When your bankruptcy is discharged, it means it’s been successfully completed; when a bankruptcy is dismissed, it means it was thrown out before it was completed due to circumstances such as failing to meet filing requirements or providing false information.

Lenders view dismissed bankruptcies in a negative light, but if your bankruptcy was dismissed due to an unintentional error, you can correct the information and file again.

The Bottom Line

You can buy a car immediately after your bankruptcy has been discharged. If it’s dismissed, however, you may not be able to get the auto loan you need. If you’re looking to file for bankruptcy, our trusted partner can assist you.

Drivers Lane is here to help people dealing with unique credit situations find car loans. We know that not all lenders are able to handle bankruptcy, and we want to point you in the direction of a dealership that can help.

We work with a nationwide network of special finance dealers. We'll work to match you with one near you after you fill out our easy and free auto loan request form.