Many will agree that times have changed over the past 5 years. Individuals who were once doing well are now considering chapter 13 bankruptcy as their only option. The question is, how will this effect your import car insurance rates?
Chapter 13 or 7 Bankruptcy
Filing for Chapter 13 allows individuals to protect their assets in ways that Chapter 7 can not. Chapter 13 allows you to set up payment options to repay your debts as long as you have stable income available. This differs greatly from the Chapter 7 option where most of your personal assets are seized as payments for your current debt situation.
While both have a negative impact on your credit rating, Chapter 13 is the best option for people who want to protect their possessions with a loan or lease balance.
Bankruptcy and Your Import Car Insurance
Now that you understand the basic differences in Chapter 13 and 7 bankruptcies, how will these impact your import car insurance? Will it have a negative impact? Will my import car insurance rates go up?
In short, the answer is yes. However, the amount depends on your credit ratings before you filed for the bankruptcy. If you currently have import car insurance and continue to make your payments, you are less likely to have a rate increase when it is time to renew. Some insurance companies check your credit ratings once per year so a lower credit rating may cause your rates to increase.
Why Does This Impact My Import Car Insurance?
When filing any type of bankruptcy it will have a negative impact on your credit and will remain on your credit history for up to 10 years. During this time, import car insurance companies use your credit as a part of their risk assessments. You may find that your rates will increase or may not offer you the best rates available. If you are looking for new import car insurance after the bankruptcy, you may discover that some agencies will not offer you a quote if they consider the bankruptcy as a risk factor.
Why Do Import Car Insurance Companies Care About My Credit?
Import car insurance companies base their rates on what is called “risk factor.” If you have been involved in a considerable amount of accidents you are placed into the “high risk” category by the insurance agency. Your credit history is a lot like your driving record to import can insurance companies. Just as car accidents indicate irresponsible driving in most cases, bankruptcy indicates financial irresponsibility. At least to import car insurance companies, this is the case. According to insurance agencies, as financial stability decreases, insurance risk increases.
We hope that you now understand the connection between bankruptcy and your import car insurance. While bankruptcy should be avoided if at all possible, it is not the end of the world. Consider staying with your current import car insurance provider before you went into bankruptcy as you may not see rate increases for a while, however, you do need to check around with other import car insurance agencies to make sure this is your best option.
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