As a dealership that works with subprime auto leads, you have likely worked with many people who have declared bankruptcy and are looking for a car. You have the program in place to offer them the automotive credit they need, but how well do you understand their situation? Learn more about two of the most common types of bankruptcy your customers experience in today’s blog post, and connect with more of them with bankruptcy mailers from Credit Mail Experts!
Chapter 7 Bankruptcy
We’ll start with Chapter 7 bankruptcy, which is what most people think of when they first start considering bankruptcy. Known as “straight” or “liquidation” bankruptcy, the Chapter 7 process discharges qualifying debt and absolves someone of the need to repay their creditors in about four to six months.
Who Takes Advantage of Chapter 7?
Chapter 7 bankruptcy is made for those in debt who have very little income left over at the end of each month and few assets. It is a targeted solution for unsecured debt – or debt without attached collateral – such as medical bills or credit card debt. Someone who has the means to complete a repayment plan with a Chapter 13 bankruptcy may be turned away.
How It Works
When someone applies for bankruptcy, the first thing that happens is that they receive an automatic stay that prevents creditors from trying to collect on what they are owed. Then, in a Chapter 7 bankruptcy case, a bankruptcy court takes charge of the applicant’s debt and property. While the applicant typically has the freedom to do whatever they like with the income and property they gain after filing for bankruptcy, they can’t sell or give away any assets they had at the time of filing without court approval.
A trustee will examine the applicant’s assets and past financial transactions to look for ways to pay off some of the debt. If they applicant has any valuable nonexempt property, which can include a car or a home, then that property may be surrendered to the trustee to apply toward their debt. In many cases, the applicant doesn’t have any worthwhile assets to contribute, and therefore they don’t have to surrender much if any property.
At the end of the four to six month long process, all of the applicant’s debt will be wiped out, with some exclusions. They will still be responsible for any student loans or commitments like alimony or child support, but they will otherwise be debt free. A Chapter 7 bankruptcy will be listed on their credit report for the next 10 years.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also referred to as “reorganization” bankruptcy, is a way for someone to repay what they owe – in many cases, less than what they owe – and clear their debt. Instead of surrendering property, the applicant works to fulfill a three- five-year repayment plan.
Who Takes Advantage of Chapter 13?
Chapter 13 bankruptcy is made for those with debt who have a steady income and capital left over after their monthly expenses, which they can dedicate to a repayment plan. There are limits on how much debt one can have in order to qualify, but Chapter 13 is a good option for those who need debt intervention but don’t want to surrender any property.
How It Works
In the course of a Chapter 13 bankruptcy, the applicant works with the court and their creditors to create a repayment plan to address their debt. In many cases, the plan includes provisions that allows the applicant to pay back less than the full amount they owe. Aside from repayment, they also have to participate in budget counseling, but they get to keep their property.
Once someone completes the repayment plan and budget counseling, their remaining qualifying debt is wiped out. Similar to a Chapter 7 bankruptcy, there are forms of debt that remain the responsibility of the applicant, including student loans, alimony, and child support. A Chapter 13 bankruptcy will remain on their credit report for seven years.
How Bankruptcy Affects Your Customers
A bankruptcy can cause your customers’ credit to take a nosedive. They will have trouble qualifying for automotive credit at ordinary dealers, and they will likely continue to continue struggle with their credit for almost a decade. Your dealership can help, but your potential customers may not be aware of that. Credit Mail Experts can help you make the connection!
Connect More With Bankruptcy Mailers
With Credit Mail Experts, you can reach your target customers easier and more effectively. We operate a bankruptcy mailer program that saves you time and money and offers an unparalleled return on investment! With our bankruptcy program, you can reach new potential customers without having to stuff envelopes yourself or field incoming calls.
Credit Mail Experts takes care of it all, from a bankruptcy mailer designed for an unbelievable opening rate to a 24/7 call center to connect you with leads. Many customers convert the bankruptcy leads we offer at a rate of more than 25%! If you are ready to find clients who recently filed for Chapter 7 or discharged a Chapter 7 or Chapter 13 bankruptcy, contact Credit Mail Experts today. Don’t wait — once your county is claimed, your dealership will be locked out! Use our simple online form or call Credit Mail Experts directly for a free bankruptcy market analysis. We’re here to help you sell more cars!