Purchasing a Vehicle During or After Filing for Bankruptcy: The Facts Directly from a Detroit Car Salesman

For years, we have referred our bankruptcy clients to Mario Puglise, Bankruptcy Specialist at Jefferson Chevrolet in Detroit, for vehicle financing during or after a bankruptcy filing.  He specializes in car financing for Michigan families who filed for bankruptcy protection.  We sat down for an interview to discuss:

• How he is able to help bankruptcy filers achieve good financing;
• His prospective on credit and how to resolve debt and bad credit;
• Sample financing terms for bankruptcy vs. non-bankruptcy clients based on his years of experience.

  Question:  You recently came out of retirement to work at Jefferson Chevrolet, why? Mario:  I can tell you this, I only took the job as Used Car Manager if they let me take care of my Bankruptcy clients. There is nothing more rewarding than helping out people that are in bankruptcies. 99.9% of the time they get a much better deal than the current vehicle they own or prior vehicle that might have been surrendered and most of the time they will pay below retail.   Question:  Is there a standard waiting period to purchase a new vehicle after filing for bankruptcy in Michigan? Mario:  We will finance a Chapter 7 bankruptcy client the day after the case is filed without recourse, assuming they are represented by an attorney.  If a person files a Chapter 7 "pro se" then we will only finance them after the 341 Hearing First Meeting of Creditors has been completed.  For Chapter 13 bankruptcy clients we can finance at any time after filing, but there are additional steps we have to take with the court.  I find that 80 - 90% of the time, bankruptcy clients will qualify.   Question:  Do the requirements or qualifying standards change for someone who files a Chapter 13 bankruptcy vs. a Chapter 7? Mario:  Yes, there is a requirement for Chapter 13 clients to get prior court approval. In terms of qualifying, we don't even pull a credit score.  We look at prior credit history (i.e. did the person have credit established prior to filing bankruptcy?) as well as current income to qualify our buyers.   Question:  What kind of financing deals do bankruptcy clients get versus a person with good credit or a person with bad credit? Mario:  We are able to get better financing for people who filed for bankruptcy vs. those dealing with bad credit.  The reasons are simple:

• Their debts have been resolved and will not interfere with their ability to make new car payments;
• Chapter 7 bankruptcy filers pose less of a risk because they cannot file for debt elimination for another 8 years;
• I find that after bankruptcy, the default rate is lower (like less than 1 %!) because bankruptcy clients improve their budgeting and debt management skills after filing.

My lenders see these facts and that's why bankruptcy clients are given better rates than those clients trying to manage a lot of debt and therefore, have bad credit.   Question:  What are some examples of financing you see?  What would a person who has good credit get in terms of a financing vs. a bankruptcy client vs. someone with unresolved debt/bad credit? Mario:  Here is a typical range for terms and interest rates:

• A person with good credit might pay slightly over retail at an interest rate of 0% - 7.9%.
• A person in bankruptcy may pay less than retail at an interest rate of 15.49 - 19.95%.
• A person with bad credit and unresolved debt may pay up to 24% above retail and upwards of 21.95% - 24% as their interest rate.

It is better to be in bankruptcy than to have unresolved debt½your credit will not improve until you address the debt situation.   Question:  In your opinion, what is the most common misperception about filing for bankruptcy? Mario:  The most common misperception is that filing bankruptcy will destroy you financially or be the worst thing in the world½.I think it is the opposite.  The stress of unresolved debt is definitely worse than the process to get resolution.  For people that are unsure about filing bankruptcy to resolve their debts, I say:  A year from now you will look back and say that that was the best thing I ever did½and it's true.  95 -99% of the time, people will look back and say, 'Wow am I ever glad I did that, it is a load off!'   Question:  Do you find that your clients who have been through the bankruptcy process are better at managing debt versus clients who struggle with bad credit? Mario:  As a whole, the people I see who have filed bankruptcy are better at managing their credit due to the fact that they went through the turmoil of accumulating bad debt and took the steps to resolve it.  I find they are a lot more careful and wiser on financial decisions½.a little thriftier.  They make wiser decisions about spending so they don't go over their heads.   Question:  What would your advice be to those people trying to decide if they should try to resolve their debt? Mario:  Credit is power.  The better the credit, the more power you hold.  That is exactly what credit is.  A person that has good credit, their car payment might be $300 a month½.for a person with bad credit, that same car might be $425 or $450 per month.  So the better the credit you have, the more power you have½.the power to make good financial investment decisions.   Question:  Any other comments you would like to make? Mario:  My job is to help people improves themselves.  I do this by assisting them in buying a nice car with fair terms.  I do this by coaching them on steps to improve their credit.  For instance, I suggest they do banking at a credit union.  I like Michigan First.  I tell clients to do a direct payroll deposit and the credit union will give them a $1,000 credit card.  I tell clients to use it carefully and keep the balance under $500½.ideally under $250 as that will improve their credit score faster. I love my job because I help good people and that is very satisfying.  It is a win/win situation for everyone.  The bank wins because they get a good customer, I win because I sell a car½..but most importantly, the client wins because they get a beautiful car they can be proud of and an opportunity to rebuild their credit.   To reach Mario Puglise, you can e-mail to AutoLoan44@aol.com or call him at 248-217-7711.