You can file for bankruptcy as soon as you have secured a qualifying debt.
However, if you file bankruptcy within 90 days of purchasing a vehicle, the creditor that financed it may be able to reclaim it. (Note that most lenders will require borrowers with poor or no credit to provide proof of auto insurance. It’s important to keep this in mind before committing to a purchase if you’re thinking of filing for bankruptcy and don’t already have auto insurance. Failure to provide proof of insurance could result in the deal falling through.)
If you file for Chapter 7 bankruptcy, the court will appoint a trustee to oversee the distribution of your assets to your creditors. The trustee may decide to sell your car and use the proceeds to pay your debts.
If you file for Chapter 13 bankruptcy, you will be required to make monthly payments to the bankruptcy court for a period of three to five years. During this time, you will be allowed to keep your car as long as you continue to make the payments.
It is important to note that filing for bankruptcy can have a negative impact on your credit score. This can make it difficult to obtain loans or other types of credit in the future.
