Lefkovitz & Lefkovitz

Nashville Office 615-256-8300       Cookeville Office 931-400-2218

Nashville Office 615-256-8300
Cookeville Office 931-400-2218

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Bankruptcy dismissals and auto loans

On Behalf of | Jun 29, 2017 | Chapter 13 |

Tennessee residents who have had their bankruptcy case dismissed may find it difficult to obtain an auto loan. They should understand the impact a bankruptcy dismissal can have on their future credit.

Individuals who file for bankruptcy are required to adhere to the regulations and procedures established by the court. If the bankruptcy case has been discharged, then it means that the debtor has successfully gone through the bankruptcy process. However, bankruptcies that have been dismissed, either with or without prejudice, indicate that the debtor has not completed the process. Bankruptcies dismissed without prejudice means that some form of procedural error occurred and the debtor will be able to refile immediately and correct the issues that may have resulted in the dismissal. Having a bankruptcy dismissed with prejudice could result from purposely violating the court’s orders, filing excessive bankruptcy cases to deter creditors and engaging in bankruptcy fraud by concealing assets and providing false information to the court.

Subprime lenders generally do not distinguish between the two types of bankruptcy dismissal, and both can reflect poorly on an individual’s credit report. Lenders tend to have little expectation of receiving timely month payments for an auto loan from a consumer who was not able to follow the rules established by a bankruptcy court or submit regular payments for a court-approved payment plan.

Bankruptcy filers who are having difficulty making timely payments to the court should consulted with their trustee as soon as possible. If their case is dismissed, the debtor’s only option to obtain a vehicle may be a high-interest loan. A bankruptcy attorney may advise clients with substantial debt about how Chapter 13 works and the importance of proposing a realistic payment plan to the court.

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