Texas residents who are contemplating bankruptcy are often concerned about obtaining future credit. This is a valid concern, especially in the area of automobile loans since transportation is often necessary to retain employment.

Though a bankruptcy is a blemish on a credit record, it can also be a time for rebuilding credit. There are subprime auto credit companies that will look past a credit score when making a decision to issue a loan. Most will require certain qualifications. The borrower will normally have a steady employment history and verifiable income. In addition, the lender may require proof of permanent residency, often in the form of a utility bill in the borrower’s name. Either a landline phone bill or phone contract could suffice.

As to the bankruptcy, many lenders require that a Chapter 7 case be completed and a discharge granted. If the case had been dismissed, obtaining credit may be more difficult. In a Chapter 13 case, a loan may be denied if the case is ongoing. This is because the debtor has submitted a plan to the court for repayment of pre-filing debts and the plan may require the use of all disposable income during the repayment process. If a hardship exists, it may be possible for the debtor to seek court approval for a car loan during the plan repayment process.

Though credit may be more expensive for borrowers with a bankruptcy on record, the discharge of other debts can make loan payments more manageable as there should be a little more disposable income after the discharge. As time passes, the bankruptcy will have less of an effect on the borrower’s credit picture and the post-bankruptcy borrowing activities will become the main focus of the lender.