2020 Best Invention

Can I Buy or Refinance a Car During Chapter 7 Bankruptcy?

1 minute read Upsolve is a nonprofit tool that helps you file bankruptcy for free. Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card. Explore our free tool


In a Nutshell

Yes, you can buy a new (to you) car while your Chapter 7 bankruptcy case is pending. If possible, wait until your discharge has been granted as that will give you more negotiating power with the bank.

Written by Attorney Andrea Wimmer
Updated May 15, 2023


Yes, you can buy a new (to you) car while your Chapter 7 bankruptcy case is pending. If possible, wait until your discharge has been granted as that will give you more negotiating power with the bank. At that point, the bank will know that you have no (or almost no) debt to deal with and that you can’t file Chapter 7 bankruptcy again for at least 8 years. Combine that with the fact that you’re likely looking to rebuild your credit (paying even closer attention to making timely payments than before), and you should have no problem getting approved for a loan.

Keep in mind, however, that you’ll likely get stuck with a pretty high interest rate. Since this is a post-petition debt that your discharge will not eliminate, only take out a loan that you know you can afford to pay every month. Otherwise, you’ll end up in a difficult financial situation all over again. 

Upsolve User Experiences

1,681+ Members Online
Andrew Morales
Andrew Morales
★★★★★ 7 hours ago
Exceptional Service and Support - A Lifeline During Bankruptcy I am delighted to share my heartfelt gratitude for Upsolve and the exceptional assistance they provided my wife and me during our bankruptcy filing. Their expertise, kindness, and user-friendly platform made an otherwise daunting process remarkably simple and accessible. From the moment we engaged with Upsolve, their team exhibited an unwavering commitment to helping us navigate the complexities of bankruptcy with ease. Their knowledge and professionalism were evident at every step, and they went above and beyond to ensure we felt supported and understood throughout the entire journey. Upsolve's user-friendly platform was a game-changer, simplifying the otherwise overwhelming paperwork involved in bankruptcy filings. Their intuitive interface guided us through each necessary form, reducing confusion and streamlining the process. Thanks to their comprehensive resources and guidance, we were able to complete the filing accurately and efficiently. What truly set Upsolve apart was their empathetic and caring approach. The Upsolve team was always available to address our questions and concerns promptly, providing clear and compassionate explanations that put our minds at ease. Their commitment to accessibility is commendable, particularly for individuals like us who couldn't afford the services of a lawyer. Upsolve made bankruptcy filing a viable option for those facing financial hardships, providing much-needed support to those who need it most. While we have just completed the filing process and await the final outcome, we are confident that Upsolve's expertise and meticulous assistance will yield positive results. However, regardless of the outcome, we are eternally grateful for their invaluable help. They have given us hope and a fresh start, empowering us to take control of our financial future. If you find yourself in a similar situation, I wholeheartedly recommend Upsolve. Their commitment to making the bankruptcy process more accessible, their exceptional support, and their user-friendly platform make them an unparalleled resource for anyone in need. Thank you, Upsolve, for being our guiding light during this challenging time.
Read more Google reviews ⇾
Bryan “Digitalb” Tomlinson
Bryan Digitalb Tomlinson
★★★★★ 4 days ago
They are great Fast and easy to use
Read more Google reviews ⇾
Dave W
Dave W
★★★★★ 4 days ago
Very helpful and easy to use instructions. It seemed overwhelming at first but now that I got it done it was not that bad.
Read more Google reviews ⇾

Refinancing your car during Chapter 7 bankruptcy

Your best option for “refinancing” your car loan to get better payment terms while your Chapter 7 bankruptcy is pending is to do either a reaffirmation of your current loan or redeeming the car with a new loan.

It doesn’t always work, but if you’re reaffirming your car loan, ask the lender for concessions in the form of lower interest rates or maybe a reduction of the amount owed. The bankruptcy court is typically much more likely to approve a reaffirmation agreement where such a concession has been made. It’s totally ok to mention this to them during your negotiations.

The other form of “refinance” for your car loan in a Chapter 7 bankruptcy is through a redemption. When you redeem your car in bankruptcy, you essentially buy it for its current fair market value - not what is still left owing on the loan. Taking out a new loan to redeem a vehicle is a form of refinance but with the added bonus that the loan amount will no longer be greater than the value of the car. 



Written By:

Attorney Andrea Wimmer

TwitterLinkedIn

Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled... read more about Attorney Andrea Wimmer

It's easy to get help

Choose one of the options below to get assistance with your bankruptcy:

Free Web App

Take our screener to see if Upsolve is right for you.

Take Screener
11,377 families have filed with Upsolve! ☆
or

Private Attorney

Get a free bankruptcy evaluation from an independent law firm.

Find Attorney

Learning Center

Research and understand your options with our articles and guides.

Go to Learning Center →

Already an Upsolve user?

Read Support Articles →

News

    + Show Articles
    Y-Combinator

    Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can't access their basic rights when they can't afford to pay for help. Combining direct services and advocacy, we're fighting this injustice.

    To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.