Do I reveal my bankruptcy on loan app?
November 12, 2011 9:05 PM   Subscribe

Do I have to reveal a bankruptcy that has fallen off my credit report when applying for a car loan. My credit union is asking me directly if I have EVER declared bankruptcy on its loan application. I have waited till it dropped off to apply for a loan but the way it is worded has me worried. I have not filled out the app yet and was thinking it might be better to go in person and talk with someone. My credit score is 736 which I think is pretty good, but I am still worried about this question. Any experience with this anyone?
posted by cairnoflore to Work & Money (14 answers total)
 
You do. They aren't asking if it is in your credit history. They are asking if you ever have. To do otherwise would be deceptive, although I fully understand your reticence. Your long history of good payment should be redemptive.
posted by satyricaldude at 9:11 PM on November 12, 2011 [1 favorite]


I filed for bankruptcy in 1996. It took a long time to get my credit score back to the high 700s.

I don't say anything about it.
posted by Pogo_Fuzzybutt at 9:14 PM on November 12, 2011


You have to disclose it. It's an honest question, and it deserves an honest answer. I think most of those forms have a little disclaimer about describing whatever or other things though don't they? Like attaching a sheet or something?

If not I would talk to a person at the credit union about it.
posted by sanka at 9:20 PM on November 12, 2011 [1 favorite]


If you don't and they have some way of finding out, and do, you aren't getting the loan. If you do and make a full account of it and your subsequent good payment history you stand a decent chance of getting the loan.

Call the CU, talk with someone without giving your name, describe the situation and ask their advice, see what they say.
posted by edgeways at 9:28 PM on November 12, 2011


Don't fuck around with financial contracts like this. If they're asking if you've ever declared bankruptcy—and that means "ever ever", not just "recently" or "recent enough to affect your current FICO score--—then you should disclose your ancient bankruptcy. I guarantee you that there is a clause in the loan contract that says they take possession of "the Property" if it is discovered that you have omitted information or lied on your application.
posted by Mikey-San at 9:29 PM on November 12, 2011 [4 favorites]


Also, what everyone is saying about talking to the CU about the matter. Either ask anonymously, or ask your loan officer directly. I can't speak for all credit unions, but mine was very nice and accomodating with my car loan inquiries throughout the entire process. Look at it this way: if they want it on the application, you're going to have to tell them anyway. And if you don't need to put it on the application, it doesn't really matter if they know because you asked about it. (That is, only what's on the application should matter.)
posted by Mikey-San at 9:32 PM on November 12, 2011 [1 favorite]


nthing what everyone has said. Also, I think you'd be surprised how common a bankruptcy is. You don't know about most of them because your friends don't run into you at the store and say "guess what, I declared bankruptcy last week," the way they say "Hey, I bought a new house/boat/car/etc."

Especially lately.

I also think that a decent credit score now and good recent history shows you are a person who has picked themselves up and moved on. You shouldn't have too much trouble getting a loan.
posted by randomkeystrike at 5:54 AM on November 13, 2011


If the bankruptcy was long enough ago that it's not on your report anymore it *shouldn't* make any difference. Whether it does or not is the decision of the CU.

On the technicalities of the matter--they could theoretically still find out about it, since a bankruptcy is in the public record. It's one of those things where if everything goes okay, you get the loan and pay it off, it won't matter either way, but in the small chance anything goes wrong for some reason and lawyers are involved, it could come to light that you have a false statement on the original application, and that's more likely to work against you than for you.

(IANAL, but have worked in credit.)
posted by gimonca at 7:37 AM on November 13, 2011


You have to disclose it. It's an honest question, and it deserves an honest answer.

No it does not. Not in business anyways. You've probably noticed that banks,insurance companies, HMOs, mortgage companies, Walmart and a huge number of other companies are not exactly playing by the rules. In my opinion if you stick to some moral code about "honest question-honest answer" when your inquisitor is not likely doing the same then your questioner probably views you as a chump (most banks probably view us as that anyway).

It's unclear if the bank even has the right to ask you such a question considering that Federal law requires that all references to that long past bankruptcy be dropped from the public record. Answer "No" and in the extremely unlikely chance there should ever be a problem with it then your defense will be the Fair Credit Reporting Act and it's provisions which require that your record be cleared of the bankruptcy after 7 years.
posted by Poet_Lariat at 8:25 AM on November 13, 2011


I would not disclose it if it does not appear on my credit report. It's a freaking car loan, you're not a trying to get a new heart/lung/kidney.

Credit applications are pretty generic and what they need to know is if you pay your bills on time and are capable of paying for the car. You have a good credit score and a job. Don't make a mountain out of molehill.
posted by shoesietart at 9:13 AM on November 13, 2011 [2 favorites]


It's very easy to find out if you've filed bankruptcy more than 7 years ago. It's part of the public court record, just not credit reports. I can still find my parents' bankruptcy from ages ago on the web.
banks,insurance companies, HMOs, mortgage companies, Walmart and a huge number of other companies are not exactly playing by the rules.
I'm not sure why 10 years is "the rule". It's the rule for removal from credit reports, but these are not the only thing banks will consult when underwriting a loan. But with good credit and bankruptcy far in the past, I doubt you'll have a problem one way or the other on that checkbox. In that case, why risk triggering the fraud clauses?
posted by pwnguin at 12:26 PM on November 13, 2011 [1 favorite]


Go ahead and disclose it. There is zero chance it will have any effect on your approval or even the terms offered. Bankruptcies are not the stigma they may have once been.

Generally banks want to see:

1. x mount of time has passed since the bankruptcy. Not sure what car lenders want but you would easily qualify for a mortgage as long as your bankruptcy was 2 years old. A car lender would probably be far more lenient regarding the minimum time table. Obviously your BR is far more than 2 years old.

2. A re-establishment of credit. Don't make the mistake of paying cash for everything or doing without after a BR. The banks understand stuff happens. They just want to see you've learned your lesson and can pay your bills on time.

3. Very little if any derogatory credit after the BR. Again, the lenders want to see you've changed your financial patters.

With a 700+ score you will have zero problem getting very favorable terms. Your ancient BR will have zero impact
posted by 2manyusernames at 2:12 PM on November 13, 2011


Stickler detail: FCRA regulates credit reporting agencies; this is about a person stating a bit of information about themselves, not involving a 3rd party, which is a somewhat different matter. Also, public records are by definition public--just because the 10 year window in FCRA has passed doesn't mean they are erased from newspaper archives, courthouse records, etc.
posted by gimonca at 3:43 PM on November 13, 2011 [1 favorite]


I filled app out over the phone. Was not asked bankruptcy question directly and was approved In 2 hours. Still looking for a new used car.
posted by cairnoflore at 12:37 AM on February 2, 2012


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