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Bankruptcy Car Buying and Bad Credit



When you’re in the middle of bankruptcy and suddenly find yourself needing a car, all hope isn’t lost! It’s possible to get an auto loan during bankruptcy – both Chapter 13 and Chapter 7 – though one is easier than the other. Let’s take a look.

Which Bankruptcy Are You In?

There are processes in place to get an auto loan while in active bankruptcy. However, the ease and probability of success change depending on what Chapter you filed. Generally, it’s easier to get approved for a car loan during Chapter 13, the reorganization bankruptcy, than it is in Chapter 7, the liquidation bankruptcy.

If you own your vehicle free and clear or have a well-managed loan and equity in your car, you’re more likely to lose it in Chapter 7, where your bankruptcy trustee can sell your assets to repay your creditors. In Chapter 13, your trustee forms a repayment plan for you to follow which allows you time to repay your debts, including an auto loan.Bankruptcy Car Buying and Bad Credit

No matter which chapter you’re under, if you’re in active bankruptcy and need a car, you have to get permission from the court to take on new debt.

Getting an Auto Loan In Chapter 7 Bankruptcy

In some cases, you can get a car loan in an open Chapter 7 bankruptcy, but it depends on your lender, not all of them work with people who are in open bankruptcy proceedings. If they do, they’re like a subprime lender – a lender that can work with borrowers in unique credit situations.

Even if you find a lender that allows bankruptcy auto loans, you still need to get your trustee’s permission and make sure that you’ve completed your 341 meeting of creditors. In many cases, lenders prefer not to work with people in Chapter 7 since the process is so short, typically four to six months. When lenders grant a loan to someone in bankruptcy they risk the vehicle being sold to repay other debts, which can put them at a loss; not all lenders are willing to take this risk.

If the lender is willing to risk it with you, the process is similar to getting a bad credit auto loan.

Financing a Vehicle During Chapter 13 Bankruptcy

Getting a car loan in Chapter 13 is an entirely different process than that of Chapter 7. For starters, Chapter 13 is a long process that takes either three or five years to complete. Because of the timeframe, lenders and the courts understand that things happen, and you may need another form of transportation in that time.

There’s a process in place that allows bankruptcy borrowers to apply for financing while their filing is open. The first step is to talk to your trustee and let them know you need another vehicle. Then, you have to find a lender that works with bankruptcy. Once you do, you start the process of filling out a sample buyer’s order with the dealer.

In this paperwork, the dealer must list all the details of the vehicle and the loan, including the words “or similar” in the car description, and the highest possible interest rate you may qualify for. The “or similar” designation protects you from having to start the process from scratch if the vehicle you’re looking at sells before you gain court approval to proceed with the purchase.

Once you complete the paperwork, you bring it to your trustee, who then files a motion to obtain debt with the court. This proceeding can take a little while, so you may not find out right away if you can finance another car or not. If you’re approved, you can then head back to the dealership with the paperwork proving you’re in the clear and take delivery of the vehicle.

Ready to Find a Bankruptcy Auto Dealer Near You?

If you find yourself needing a newer ride, but don’t know where to turn due to bankruptcy, look no further. At Auto Credit Express, we work with a large network of dealerships across the country that assist borrowers who have tarnished credit, including those in active bankruptcy. Let us do the legwork for you by matching you to a dealer in your area.

To get started from the comfort of your home, or on the go, simply fill out our fast, free auto loan request form.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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