Filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy can wipe out your obligation to pay the loan, but the lender can still retrieve the vehicle if you are not current on your payments.
Chapter 7 Bankruptcy Car Repossession
A Chapter 7 bankruptcy eliminates unsecured debts and may free up more of your income to pay for your vehicle.
Chapter 13 Bankruptcy Car Repossession
A Chapter 13 bankruptcy plan will assist you in avoiding the repossession of your car and allow you to continue making affordable monthly payments on the loan. You can redeem your car and pay only the fair market value instead the full value of the amount borrowed if you have had your vehicle 910 days prior to filing bankruptcy. This can be very helpful for people with bad credit who are paying exorbitant interest rates on their vehicles.
Car Repossession Example
For example if you have a car loan for $10,000 on a vehicle now only worth $5,000 you can “cram down” the loan amount to $5,000 to make the payments more manageable or instead of paying an 18% interest rate you maybe able to lower it to the current standard interest rate which can potentially save you thousands of dollars in interest.
Contact Gina Rosato Law Firm to discuss your Car Repossession Options
If you car payments are unmanageable or if you have missed payments, contact me today for a consultation at: 813-463-8000.