So You Might Need to Buy a New Car?

What you need to know before buying a car on credit after a bankruptcy, or after bad credit?

They love to say, they will sell you a car with bad credit, of course they will, at 25%, I might sell you my own car.

After a bankruptcy one of the easiest things to do is to buy a new car, or at least a newer car. A new to you car. It sounds too good to be true but oddly enough, it’s not.

If you filed a chapter 7 bankruptcy, the more common type, then your new car creditor knows that you can’t file again for eight (8) more years from one file date to the next. So, they know that you can’t file again, and if you can’t file again, I’d sell you a car too. If you default on the new car loan (for the new car to you which is probably an older car) then we can sue you for another however many of those eight (8) years are left. Then I can garnish your wages, levy your bank account, and record a judgment lien on your house. Creditors love doing all of those things. Especially car creditors, car creditors love to be the first one to sue you. One attorney who represents car lenders told me that if “we’re the first one to sue, maybe the debtor puts up with one wage garnishment, ignores one judgment lien on the ol’ homestead. However, when the second judgment comes along, they call you. ” In fact I might as well mention, if you need a bankruptcy attorney in Southern California, give me a call, 951-200-3613

If you do have to buy a car, and sometimes you must, then your interest rates will be absolute murder. Don’t do it. If you can avoid it, avoid it. However, with a little effort and just a little time, maybe only a couple of months, you can repair your credit enough to buy a car with a decent-ish interest rate. 

If you do nothing, and you wait long enough, your credit will be rehabilitated on its own rather like a cut on  your finger will get better even if you just do nothing. Keep working in your garden or garage where it’s filthy without washing it, without a bandage, in the filth and dust and dirt and your finger will get infected and in spite of that in the long run, it eventually gets better anyway.

But if you clean it, put some Neosporin or a salve on it and bandage it, and keep it clean, then it gets better a lot faster. And what’s wrong with faster? Nothing of course.

But you just had a bankruptcy, what can you possibly do to repair your credit after a bankruptcy? Bankruptcy is the Credit-Reaper.

There are a few things.

Be sure of course, that whatever credit you still have, whatever debts you still have to pay after your bankruptcy, be sure that credit stays in good condition during the months and years after the bankruptcy is over. Don’t get into any new debt that you cannot handle, if you have reaffirmed any debts from the bankruptcy, make sure that you stay current on those and everything else including your utilities. Utilities won’t report your good payment history but they’ll definitely report your bad payment history if things go wrong.

Good credit is a combination of not too many bad things on your credit reports compared to the good things on your credit reports. Great credit is few or no bad things compared to lots of good things.

You can increase or improve your credit rating by removing bad things and adding good things to your credit reports. One of the easiest things to do to add good credit to your credit score is to buy a car, but you don’t want to do it until you’ve already improved your scores.

Check your credit after your bankruptcy is over. It’s almost a certainty that not all of the accounts included in your bankruptcy discharge are listed in your credit reports as “an account included in bankruptcy” or “bankruptcy” or “bankruptcy discharge”.

Go to AnnualCreditReport.com and check. If even one, just one of the dischargeable accounts that existed prior to your bankruptcy is not listed as included in your bankruptcy, then that account is dragging your score down. You can correct that with the appropriate letters to the creditor or to the credit reporting agencies directly. Prove that they have you listed wrong in your credit reports and they will have to fix it.

Where you do sometimes run into some fun, and by fun I mean it like Michael Jackson did in the 80s when he referred to good things as Bad: What if the account which is bringing down your score is also an account which for some reason was not listed in your bankruptcy in the first place, also called an unlisted or omitted account. Now what do you do?

Unlisted or Omitted Accounts are considered not discharged by the bankruptcy code unless two (2) things didn’t happen. See 11 USC 523 (a) (3). However, you can see from that code section that an omitted debt is nevertheless discharged if those two things didn’t happen. Here’s a hint, there is a case called In Re Beezley in which the Ninth (9th) Circuit Court held that the code section really does mean what it says that it means.

The first thing that had to NOT happen was, 1st) Did the Trustee on your case figure out that you may have assets which means that he would set a deadline called a claims bar date for creditors to turn in a proof of claim? When a trustee finds that you have assets, it’s called an asset case, and if no assets, then it is a no-asset case. In a no-asset case, the Trustee files a report with the court called a No-Asset Report. In the bankruptcy court’s court docket it will probably be listed as a Chapter 7 Trustee’s Report of No Distribution. If the Trustee did impound assets and distribute to creditors and the one you now have found was never listed, then you still owe that creditor his money because under 11 USC 523 (a) (3) it was not included in your discharge.

The second thing that has to NOT happen is 2nd) Even in a no-asset case, did you commit Fraud, Embezzlement or Malicious Injury to Person or Property against that creditor. Then if you committed any of those but you left this debt out of the bankruptcy, then the creditor was never barred from filing a non-dischargeability action against you in the bankruptcy court like would normally happen at discharge time because they never knew that a bankruptcy had been filed. Phew long sentence. Basically, at the beginning of the bankruptcy a temporary restraining order prohibits any collection efforts or lawsuits against you, except for suits in the bankruptcy itself for fraud, embezzlement or malicious injury to person or property. At the end of the case, the discharge order is a permanent injunction prohibiting collections and lawsuits against you even in the bankruptcy court for those same types of actions. A discharge does allow secured creditors to collect cars and houses if you stop paying for them.

If the omitted creditor had been listed in the bankruptcy petition and received a notice of your bankruptcy, and nevertheless, didn’t file that lawsuit in the bankruptcy, then at the end of the case, they would have been included in the discharge. How’s that for irony. Most of them won’t bother once they see how low your income is, how few assets you actually have and they might think that suing you in the bankruptcy court to prove you are a fraudster is throwing good money after bad.  But if you left them out of the bankruptcy then, therefore, they can now sue you if they want to. But they would still have to sue you to prove that you did the fraud, embezzlement or malicious injury, that’s not going to be an automatic.

If you’ve just had a bankruptcy and afterwards, if you have no debts, start by going to your bank with a little money, say $300 to $500 or $1000 and ask for a secured credit card. It may take a while to save up, but go ahead and do it. Using it sparingly and then paying it down or off quickly will help your credit scores immensely.

If you can afford to, get two of them, from different banks. Two accounts is much better on your credit reports than only one. However, unless it’s an emergency, don’t buy something unless you have already saved up the money for it first. Here’s a hint: Most things you think are emergencies are not.

In other words: Don’t Buy Stuff You Cannot Afford.

Once you’ve purchased something with your new card, you can pay it off over two or three months that way, because you already have the money saved. Do this and it will improve your credit scores.

Meanwhile, a couple or a few months after the bankruptcy discharge, go to Annual Credit Report and download your credit reports to see what is on them. If there is anything that was included in the bankruptcy that is not showing as “an account included in bankruptcy,” or “bankruptcy” or something like that, then you can ask the credit reports and even the creditor to correct the situation.

If a creditor was left out of your bankruptcy but it pre-dates your bankruptcy, then you can ask them to fix it too by sending a letter explaining the in Re Beezley ruling and that it applies to that creditor.

For specific forms and language to put into those letters, to go The Attorney’s Guide to Credit Repair for easy, fast, guaranteed Credit Repair advice.

And yes, it’s true, I do get a small commission when you buy the Attorney’s Guide to Credit Repair, but you should buy it anyway.

Once you’ve taken the opportunity to clean your credit first, then you can buy a newer car than you would have been able to, and with a more favorable interest rate than you would have been offered. That means that you can buy a better car, a safer car and more a more reliable car.

Credit Repair Takes Effort

No one is going to fix or repair your credit for you, not without some significant money exchanging hands first. But you can fix your own credit. You can repair your credit with the appropriate guidance from someone who knows what they’re doing.

Unfortunately with my busy law practice I don’t have that kind of time to help you with you efforts to rehabilitate your credit. I can steer your in the right direction though. With the Attorney’s Guide to Credit Repair, you will know the next step to take.

It’s fast, affordable, and real. Credit Repair you can afford because you are making the effort yourself. The step by step guide will bring you confidence in the market place and can give you the credit scores you need to buy a home, a car with a low interest rate, or perhaps open a business loan, provided however only if you make the efforts.

Credit repair to most people is a mystery. Why is the sky blue? I don’t know, because it is. Why is my credit score below 600? Usually you have some ideas if that’s the case. However, when you ask but how do I bring it up to 700 or more? Lots of people will tell you that they’ll do it for you for only, a lot more money than you have in the bank. Many will tell you that you just have to write the appropriate letters to get credit reporting agencies such as Experian, Trans Union and Equifax to correct the information in your credit files. But how do you do that?

I’ve reviewed the Fair Credit Reporting Act’s code sections and the laws regarding Fair Credit Reporting are on your side. In my bankruptcy law practice I would charge quite a lot of money just for a consultation on the subject, but when I found the Attorney’s Guide to Credit Repair, I was floored. They’re practically giving you all of our secrets for pennies on the dollar.

Yes, I do get a commission when you buy the Attorney’s Guide to Credit Repair, and yes, you should buy it.

You’ve Gone Through Bankruptcy

What Now?

First, take a breath, for a little while, have a cup of cocoa and relax, however, I don’t recommend the ketchup nor the Tobasco.

Afterwards, there’s plenty to do.

Bankruptcy is to credit repair as spiders are to a good nights’ sleep. Bankruptcy is the Credit Reaper. Nevertheless, sometimes bankruptcy is all you can do. You have to be able to pay for rent or mortgage, feed the family put tires on the car and gas in the tank. How can you do that if your wages are being garnished or you find your bank account empty one Saturday morning when you know your check was deposited yesterday?

If you need a bankruptcy, call I can help. Call 9512003613.

On the other hand, two of the easiest things to do to repair your credit or rehabilitate your credit, is to open a secured credit card and/or buy a car.

Don’t buy the car unless you absolutely must and there is no reasonable alternative. If you have to buy a car, the interest rate will be ridiculous. So, if you have the ability to borrow from a relative, or if you have been able to save  since your bankruptcy, or if you can take a small 401k loan to buy a reasonable car, go ahead. Make it reasonable, you don’t need a lot of options, so skip the bells and whistles. Get an AM/FM radio and air conditioning that both work. Stop there because the lower your car payment, the better your credit will be. If you want to buy a house down the road, avoid buying the car on credit if you can.

The next thing that is easy to do, in general, is to get a secured credit card. You go to your bank or a bank and bring in say $500 cash and ask for one. Usually if you’re paying the amount of the credit line you want down, they’ll do a credit-check light, or in other words they might not even do one. At my bank, because I was already banking there, they only checked their own records. I gave them $1000 in cash, and they gave me a card with a $1000 credit line with very few questions. The interest rate will be horrible but keep reading and you’ll see that it doesn’t much matter if you do as outlined below.

So do you buy something and pay it off? No. You can of course and that will help, but is actually not the best strategy when trying to improve your overall credit health. So you now have a credit card with a $500 credit line, what do you do? Save up another $500 first. Then find something you need to buy for $500, such as a new computer or a TV or something. Then don’t pay it all off at once. You’ve got the money saved, so you pay it off 1/3rd at a time.

By doing it 1/3rd at a time, the credit card company will like you. You’ve paid it off quickly so you’re a good risk. But you also had to pay some interest, and that makes you a great risk. Pay it off too fast, means no profit for the credit card company. Pay it off too slow and that means high profits for the credit card company but also high risk and that is not so good for them. They want want profit and high performing contracts in their portfolio because that has a positive impact on the stock price.

In a year, not only will you get your deposit back but they’ll double your credit line or more. And that increase in credit-line is the most important thing that happens to your credit rating. It can’t happen unless your payments are in good standing, so yes those are important too. But you need both to have good credit, exceptional credit means you have good standing in your payment histories, but also high credit lines and low balances.

Note that I said histories. So you want more than one account open and in good standing for at least twelve (12) months after your bankruptcy is over, or in a chapter 13, twelve months after your confirmation of your chapter 13 payment plan. After the Great Recession, many couples each got a secured card and then put each other on each other’s cards. Then each had two (2) cards.