When an individual files for bankruptcy, his or her assets are turned over to a trustee to pay off the remaining debt. The protocol for bankruptcy varies state to state. Bankruptcy can be a chapter 7, where the listed debts are wiped out, or chapter 13, where the trustee reschedules the amount of debt payments and may reduce the amount of the debt.  There is a period between when the bankruptcy is filed and when it takes effect or ‘discharged.’  Most auto lenders will not lend during this period of time, and the majority of auto lenders will require at least 12 months after the bankruptcy discharge before providing a loan that is often associated with the key word bad credit auto loans.