Monday, January 20, 2014

How Bankruptcy Can Help with Vehicle Repossessions

Vehicle repossessions don’t have to ruin your life, because bankruptcy can help stop or eliminate the threat or consequences of repossession!

Keep Your Car

If you are getting behind on your payments, or are about to, you should call your lender right away, and see if there is anything they can do to help. If they refuse to work with you, then bankruptcy may be a good alternative. Bankruptcy can temporarily or permanently stop any repossession efforts.

If you just need another month or two to get caught up on your car payments, and you have other debts that are getting in the way of getting caught up and staying ahead, you should consider Chapter 7 bankruptcy as an option. Filing for bankruptcy will temporarily stop any collection and repossession efforts by creditors, and will discharge your unsecured debt. This may allow you to get caught up on your payments, and eliminate all that bad debt that was preventing you from being able to afford your car.

Alternatively, if you are too far behind and getting caught up seems impossible, or you just want to reduce your payment, a Chapter 13 bankruptcy may be a better option. Chapter 13 reorganizes your debts, and allows you to pay certain debts, while still discharge other unsecured debt, like medical or credit card debt. Filing Chapter 13 bankruptcy will stop all collection efforts, and will pay the arrears (back payments) and the car in full within 3 to 5 years. In many circumstances, you may be able to cram down or decrease the interest, and potentially the amount owed on the car. 

Car Already Repossessed, But You Want It Back!

If your car was recently repossessed, act fast! You may be able to get your car back. If you file a Chapter 13 bankruptcy at any time before the sale of the car that proposes a plan to pay the full amount owed to the auto lender, including arrears, then you can get your car back and pay it off in the plan. Once the Chapter 13 bankruptcy is filed, an attorney can file a motion to have the car returned, or, in some circumstances, the lender will simply return the car after receiving a copy of the plan. Again, you may be able to decrease the interest, and/or the total amount owed.

Car Repossessed Leaving A Large Deficiency

If your car was repossessed and sold, leaving you on the hook for a large deficiency, then either Chapter 7 or 13 bankruptcies can help you. Once a repossessed vehicle is sold, but does not pay off the original loan amount, the remaining balance becomes a general unsecured debt that is dischargeable in bankruptcy.

Failing to pay or discharge a deficiency will almost always result in a creditor suing you, and obtaining a judgment. The underlying debt often balloons into an enormous judgment amount that continues to accrue interest and fees. Once a creditor obtains a judgment, the judgment does not expire for 10 years and can be renewed. Additionally, the judgment automatically creates a lien on any real property in the county, and the creditor may apply for a writ of garnishment to garnish wages and bank accounts.

Don’t let repossessions ruin your financial stability; call us at 503-352-3690 to talk about your options. You can also visit us online.