Chapter 13 And Your Car: The Basics You Should Understand

Economic disasters can strike with little to no warning, and when you are barely making ends meet, any kind of economic disaster can leave you scrambling to keep your bills paid. You may even find yourself behind on everything and facing the possible repossession of your vehicle, not to mention foreclosure. If this sounds like you, there are some things that you should know about Chapter 13 bankruptcy and how it can help you keep your car.

Filing For Bankruptcy Stops Enforcement Actions

One of the first things that you should understand is that filing for bankruptcy puts a complete stop to debt enforcement actions, including foreclosure, lien placement, and vehicle repossession. If you're facing imminent repossession, you can prevent it from happening by filing for bankruptcy before the lender actually proceeds with the paperwork.

However, it's important to note that the halt provided by your bankruptcy filing will only buy you time. You'll have to resolve the past and future payments on your car payment as part of the bankruptcy to ensure that you can keep your car.

Filing For Bankruptcy Can Help You Get A Repossessed Car Back

If you're not able to get your bankruptcy filing in on time to beat the repossession of your car, that doesn't mean you're out of luck. In many cases, filing for Chapter 13 bankruptcy will allow you to negotiate the return of your car as part of the bankruptcy process.

In fact, you may not have to pay anything more than just the repossession fees to get your car back. In some cases, Chapter 13 filers can qualify for a cramdown on car loans, which may reduce the total amount you owe and eliminate a couple of past payments that you would otherwise have to settle to get your car back.

Filing For Bankruptcy Can Reduce Your Car Payments

A Chapter 13 bankruptcy restructures your debts, lowering many of them and allowing you to make smaller payments over a longer time. This can make your debts more manageable. As a result, if you have a car payment that's higher than you can reasonably afford, you might be able to negotiate a lower car payment to help you keep your car and still afford to meet the obligation. Your bankruptcy lawyer can help you understand how this process works and what steps are required to renegotiate that payment.

These are some of the things that you should know about Chapter 13 bankruptcy and your car. Talk with a bankruptcy lawyer today for more help and information.