If you are coming to this section, it means all the information in the previous sections, as well as reading through the money saving ideas on the site, has failed to resolve your debt problem. If you still can't come up with a plan to pay off your debt, your final option may be bankruptcy. It should be an absolute last resort and something to be avoided if at all possible. First and foremost, bankruptcy in itself can be quite expensive. You will need to pay lawyer, court and filing fees upfront. The entire process can take months and you will have to endure exhaustive questioning from creditors. Your finances will become exposed to the public and the bankruptcy will remain on your credit record for 10 years meaning that obtaining credit at affordable rates in the future will be extremely difficult. Sometimes, however, certain circumstances dictate it as the only option. There are two possible forms of bankruptcy that may be applicable if you have reached this state.
Chapter 7 Bankruptcy is a straight forward bankruptcy that eliminates most debts and relieves you of your responsibility of paying most creditors. There are, however, some debts that you are still required to pay even when filing chapter 7 bankruptcy. These include taxes, child support, alimony, student loans, legal judgments against you, money you obtained through false financial statements and loans not listed in the bankruptcy filing. While the court may force you to surrender property you own in order to help satisfy the debt, you are usually able to keep your home, car, tools used in your job and personal property.
In Chapter 13 Bankruptcy, unlike chapter 7 bankruptcy where your debts are relieved, you are required to pay back all or part of your debt. You surrender control of your finances to the bankruptcy court which will approve a repayment plan based on your financial resources. The plan will lasts from 3 to 5 years. During the period of repayment, The chapter 13 bankruptcy plan provides that you do not have to pay interest charges on the debt during the repayment period and your creditors can not harass you for repayment during that period.
If you find that one of these bankruptcy options is the only one for you, then rereading this article will be of even more importance. It will let you take a preemptive measure to get your personal finances in order so something like this never has to happen again.
Post Bankruptcy
Just like home loans, car loans can be shopped to many lenders. Qualifying for a car loan with an adverse credit history can be tricky and time consuming but an automobile loan broker may be the perfect professional for the job. An auto loan broker can make the loan process faster and easier for the consumer and can often get better financing terms and interest rates than the consumer can get on their own from a local lender.
An experienced auto loan broker will be able to shop your proposed loan to more lenders in a shorter amount of time. If your broker has a long history of brokering auto loans, they will have established relationships with many loan companies. Even when using a loan broker, it is still imperative that the consumer do their own comparison shopping and review any offers made by the broker for excessive fees as well as interest rates.
Most all car loan processors or lenders have an online application that will make the loan application process much quicker. Although copies of work history or banking statements may be needed at a later date, the initial process will most likely only require that you give the loan broker permission to access your credit and to verify any other pertinent information. It is always a good idea to check your own credit record before applying for a loan to verify that the information that it contains is correct. Make certain that all credit lines that were involved in the bankruptcy filing are marked as discharged. It is also important to double check your positive credit lines to verify that they are reporting correctly.
While it is always important to read contracts carefully before signing them, it is possible to get an answer on an online auto loan application in as little as 20 minutes. While this approval does not bind you into a loan contract, it does get the ball rolling to what should be a relatively fast transaction. After you review and agree to the terms of the loan, the paperwork will be processed and prepared for signatures.
Once the loan is complete, you will be mailed a blank check and loan forms that will require your signature. The loan papers are returned to the lender and you then sign the check over to the person or company that you are purchasing the car from. This would complete the loan process and require you to start car payments within a matter of weeks.
Now that you are the proud owner of a new car, you should be able to re-finance your car after your credit improves. Bankruptcy will not keep you from buying a new car but it can affect the interest rate that you pay. By doing some research and shopping for the best rates, it can actually help to reestablish your credit with a positive credit line after repaying the loan on time for 3-4 months. The longer the loan payments remain marked on your credit report as being paid as agreed, the better for your credit score and long term credit health.
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