Car Repossession and Bankruptcy
The Walker Law Firm works with bankruptcies in the Greater Dothan, Alabama area. We may be able to help if you have fallen behind on your car payments
If you have been having difficulty making car payments as a result of job loss or reduction in hours, or you are finding that the weight of other expenses is making it difficult to maintain your car payments, bankruptcy can possibly offer relief from the threat of having your vehicle repossessed.The
Your options for a personal bankruptcy filing are Chapter 7 and Chapter 13. Either
way, the most immediate form of relief is the Automatic Stay. The Automatic Stay places nearly all
collection activity, including collections on auto loans, on hold. The holder of the auto loan is temporarily barred
from resuming collection activity.
With a Chapter 13 bankruptcy filing one of your options could be arranging to
keep your car as part of a repayment plan that is approved by the Bankruptcy Court. This process is known as
reaffirming the debt and the repayment period usually lasts for 3 to 5 years. You would need to continue making
payments on your car and arrange to repay any past due amounts including interest. As long as the payments are
consistently made the auto lender cannot repossess the vehicle. If payments are missed, the lender can resume
collection activity including repossession.
Other options may be possible under Chapter 13 such as redeeming the vehicle for the value of the car in a lump sum
as opposed to paying the amount owed which can often be much higher. In some cases you may be able to renegotiate
the interest rate may or have of the length of the loan be extended so that the you can repay the amount owed while
staying within your budget.
Under Chapter 7 Bankruptcy you have the option to reaffirm your auto loan but depending on your circumstances, you may want
to
consider surrendering your vehicle to the lender, especially if the amount owed is much higher than the car's
value.
If you meet the means test for Chapter 7 Bankruptcy, any amount owed on the remaining balance for the auto loan, including
interest and collection fees, can be discharged at the conclusion of the bankruptcy proceedings. This option can
be
especially attractive if the amount owed is significantly higher than its value, but also if the car has high
mileage and may be in need of costly repairs. It is important to keep in mind that if you choose not to reaffirm
your car loan, the lender can resume collections and repossession activities. Surrendering your vehicle under Chapter 7 Bankruptcy doesn't mean that you will be unable to
obtain another car. Some lenders are willing to work with people filing for Chapter 7 during and after the
bankruptcy proceedings. While bankruptcy does stay on your record for a number of years, financing isn't always
out
of reach. Lenders who are willing to work with people during or immediately following Chapter 7 Bankruptcy will charge a
higher interest rate but it still may be a better option than making payments on a car with high mileage and
little
value that may be in need of repairs as well. While taking on a loan for another car at a high interest rate may not seem like
the best idea, it does offer you a chance to rebuild your credit by making consistent, on-time payments. This may
be
more feasible than some would think especially when non-secured debts are discharged, which can free up your
budget
to make monthly payments more easily. In many cases after one year of consistent, on-time payments are made it is
possible to refinance your auto loan to a lower interest rate. If you plan on keeping your vehicle you do need to consider whether you can afford
to maintain the payments and whether it would be worth it given your car's age, condition, as well as your own
individual needs. An experienced bankruptcy attorney can help you figure out which option may be
best in your case and will advocate on your behalf when it comes to dealing the Bankruptcy Court and your lenders.
We are a Dothan, AL Law Firm. If you are struggling to make your car payment, accumulating overdue bills, or if you have any questions on Chapter 7 Bankruptcy, contact us today for a FREE consultation!
Your options will likely depend on which type of bankruptcy filing is right
for
you.
In some cases you may be able to keep your car and in others you could make a fresh start
and get out from under
the weight of owing much more than your car is worth.
Chapter 13 and Repossession
Chapter 7 and Repossession
I'm not sure which option is best, can a bankruptcy attorney help?