Help With Auto Loan Refinance After Bankruptcy

by Chris
(Texas)

Question: I need help with auto loan refinance after bankruptcy.

I have an issue where due to divorce and some issues with health I had to file bankruptcy. It started as a Chapter 13 but had been dismissed and refiled as a Chapter 7 after losing my house to a short sell due to the housing market, etc.

Everything was discharged 9 months ago. At the time I had a gas guzzling SUV which I was more than double upside down and the judge would not allow me to reaffirm the loan due to this.

The auto loan was included in the Chapter 7 bankruptcy and I surrendered the vehicle. As I am a single mom and need a car, my brother helped me by financing a good, reliable, used car for me.

I made the down payment and have made all payments on time for the past year. The agreement was for me to refinance into my name after a year.

Since I am in a much better position now and am working to reestablish credit, I thought I might be able to trade out of the vehicle, but I am upside down and that just wouldn't be a smart decision.

So, I am working to save additional money to pay down the negative equity before I try doing that.

I have been desperately searching for a lender to refinance that can help me to refinance the car out of my brother's name and into mine so the positive monthly payments are used to help my credit standing as well as freeing him up to move on with his life.

I feel like I have hit a brick wall in locating a lender to do this. Can you suggest any lenders that can help with auto loan refinance after bankruptcy on a vehicle that I already have and with a bankruptcy discharge a year old, but positive credit since that time?

I feel like I am stuck between a rock and a hard place. Any help is appreciated!


Answer: Hi Chris,

I'm sorry to hear all that has happened to you as you sound like a nice person that has, as you put it, been stuck between a rock and a hard place.

There are many variables that apply to your situation that I am not aware of, but I will try to answer the best I can.

The first thing that comes to mind for an auto loan refinance after bankruptcy is that you're going to need (in most all cases) a bare minimum of a full 12 months after the BK, most lenders look for 24 months.

And, you'll definitely want to be able to show the bank/credit union a good financial commitment (down payment) to the vehicle.

One thing to keep in mind, and not to be discouraging, is that it is easier to get a loan after bankruptcy than it is to refinance after bankruptcy.

That being said, I would think based on what you've told me that a credit union would be your best and easiest option. Even though I said easiest, it will still probably take some leg work on your part.

Check out Money Aisle's Reverse Rate Auction to see what lenders they work with (they have a couple of hundred) that might offer auto loan refinance after bankruptcy and be able to help you.

If they don't have any lenders that can help...

Call as many credit unions as you can get phone numbers for (search CU's here http://www.creditunion.coop/cu_locator/quickfind.php)and explain your credit situation to them (don't let them pull credit unless they are fairly sure they can help).

See if they have any programs that might work for you in your current situation. If not ask them what it will take...More time, more down payment, a cosigner, etc.

I mention cosigner, because what you may need to do is have your brother cosign for your auto loan refinance after bankruptcy for another year (you'll actually be on the loan this time though).

I know this may not be what he wants, but it will help build your credit and establish a relationship for you with a CU to eventually get him off the loan.

When I was in TX, I used to do a fair amount of business with TRUwest credit union, but have no clue what types of programs they offer now.

Sorry I couldn't give you a more specific answer, as there are just too many variables involved, but calling around will more than likely be your best option.

I can not think of any traditional banks that would be able to help in your situation (maybe Capital One, Chase or Wells Fargo/Wachovia), but you never know a local bank might be willing to work with you.

If I can help further, please don't hesitate to contact me.

Good luck,
Justin