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Can i refinance my car loan RIGHT BEFORE i file for a Chapter 7 BK to get a better % and shorter loan terms?

how long before i can refinance my car loan

Posted October 13, 2013 4:10pm

There are a few issues that you need to discuss with a bankruptcy attorney before trying to refinance your car loan. You need to review whether a new loan right before bankruptcy will create problems of "good faith" in your case. Getting more debt, or a new debt, right before filing can create problems.

Also, as other attorneys mentioned, the credit union probably won't release the title to the car without paying all loans you have with them. It is common for credit unions in Illinois to add the "cross-collateralization" clause, which says something to the effect of "any security pledged on this loan is also collateral for all other loans, past or present, with us". The credit unions take these cross-collateralized loans so they have better protection from default. They are not likely to give that up so easily. You need to speak with an experienced bankruptcy attorney to develop a complete plan of action before trying to refinance.


in a Chapter 7 Bankruptcy, people who owe a credit union on a vehicle have to choose between keeping the vehicle and paying for all loans and credit cards outstanding with the credit union, or just giving the vehicle up and not paying for any of the debt to the credit union. If too much is owed combined on all the debts, it makes more sense just to give up the vehicle and get a new loan for a lot less money on a different vehicle.

It's very important to consult with an experienced bankruptcy attorney to review all of your options.

Daniel J. Winter


Offices in Chicago, Gurnee, Oak Lawn, and Skokie, Illinois

Any advice given is general in nature and cannot be relied upon until the client retains the attorney after a full interview and review of the facts of the situation. No attorney-client relationship exists until a retainer agreement is signed and fees are paid.

Category: Credit

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