Times are tough, there is no doubt about that. With an alarming number of people declaring bankruptcy, many are lost when it comes to knowing how it will affect almost every part of their lives. Auto insurance is one of these areas, and rightfully so. Filing Chapter 13 Bankruptcy can greatly affect what you will be paying for auto insurance, but not everyone needs to worry.
There are 2 major types of bankruptcy; chapter 7 and chapter 13. The form of bankruptcy you file under will have a large impact on your credit score, and in turn, your auto insurance premiums. Of course, filing for bankruptcy should be your last resort. A bankruptcy filing will remain on your credit history for 10 years, and will have profound negative effects on your credit rating.
Chapter 13 bankruptcy is the ideal choice of the two for an individual. It will grant the person 3-5 years of protection from creditors, but will allow them to keep many of their assets, while they pay back creditors.
Can I Get Auto Insurance with a Bankruptcy on My Credit History?
The chances of getting denied coverage due to a bankruptcy are slim, but your are likely to see a rise in your premiums.
Will My Auto Insurance Premiums be Affected?
As you could have guessed, filing for any type of bankruptcy protection can really hurt your credit rating. What you may not have known is that your credit score can greatly effect your auto insurance premium. There is no umbrella answer to this question, as each insurance company has their own guidelines. If you appear to be a financial risk to your auto insurance provider- you are likely to see a hike in auto insurance costs.
Your credit score is a great way to gauge one’s responsibility, very similar to the way a driving record is used to determine a driver’s monetary risk to an insurance company.
Again, not everyone will see the same changes. There are a few things you can do to fight the chances of a rate increase. Those that pay their premium on-time, every time, are far more likely to retain their current rate, than those that have had a spotty payment history.
Other Things to Consider
Get ready for a slew of changes to your financial situation if you decide to go through with filing bankruptcy.
If you have your auto coverage payment linked to a credit or debit card, don’t forget to update your information. In most instances of bankruptcy, credit cards and checking accounts are likely to get closed.
Don’t forget to contact your auto insurance provider, and link them up with new payment details. If a payment fails your rates may go up to continue service.