There are several reasons that a potential client might consider a Chapter 13 verses a Chapter 7 even if they are eligible to file a Chapter 7 bankruptcy case.
A Chapter 13 bankruptcy allows you to restructure your debt such as paying back mortgage arrears. For example, if you are $50,000 in arrears in your mortgage you can spread that payment over 60 months to repay in a Chapter 13 plan. A Chapter 13 bankruptcy might also potentially lower a car payment by lengthening the payment terms or lowering your interest rate.
A Chapter 13 bankruptcy also allows certain debts to be discharged which are not dischargeable in a Chapter 7 bankruptcy such a property settlement /division of asset award in a divorce case. This is distinguishable from alimony and child support awards which are not dischargeable in either bankruptcy Chapter. A divorce attorney fee award is also not dischargeable in either Chapter of bankruptcy if the attorney secured an alimony or child support award.
Another debt that is dischargeable in a Chapter 13 and not a Chapter 7 is “willful and malicious injury to property” such a criminal mischief. This is also distinguishable from damage caused by driving under the influence which is not dischargeable in either a Chapter 7 or a Chapter 13 bankruptcy. If you have any questions about whether a particular debt is dischargeable it is best to consult with a bankruptcy attorney for guidance.
Pool loans usually get financed through a third-party company, such as a bank or credit union not through the pool contractor themselves. On credit reports the debt is usually listed as an unsecured debt which is the same as any type of credit card debt. However, the actual loan agreement/contract always needs to be reviewed.
It is commonplace for the pool contract to state that there will be a UCC filing if the loan becomes 30+ days past due. A UCC filing (Uniform commercial code financing statement) is a document filed by the creditor with the Florida Secretary of State to assert their security interest in the collateral (pool). A UCC lien cannot be removed or avoided.
UCC liens can include everything from real property (homestead or rental properties) or other personal property. A UCC lien will prevent you from being able to sell your property or use your property as collateral to obtain another loan such as a second mortgage or refinance of your current loan.
Unfortunately, it is something that will likely have to be paid. A bankruptcy may still be helpful because you can eliminate other debt like credit card debt or personal loans so you can focus on staying current with your secured debt. If you are having difficulty navigating whether something is a secured or unsecured debt it is good to speak with a bankruptcy attorney to figure out what can be discharged in bankruptcy and what you should continue to pay.
The short answer to that question is yes. It really doesn’t matter whether the car is repossessed by being towed out of your driveway in the middle of the night, or whether you voluntarily and cooperatively turn over the car to the lender because you couldn’t afford to make the payment.
If the lender sells your vehicle for less than you owe on it, you will be responsible legally for paying the difference (otherwise known as a deficiency). This is a little less of a problem in recent months due to car shortages, there tends to be more equity in vehicles than there has been in the past, meaning the lender in many cases can sell the car for more than you owe on it. The good news is that filing for bankruptcy will discharge a deficiency judgment against you.
It is recommended to never trade in a vehicle with negative equity and add it to your current vehicle loan. This forces you as the borrower to be in a position where you cannot sell it for more than you owe on it. Typically, that is usually accompanied with a high monthly payment. It also puts you in a position where if the car has mechanical issues it makes it even harder to get rid of it because you can’t break even if you sell it.
If you do have any questions about prior vehicle repossessions or if you are considering turning in your car, feel free to contact our office to discuss your options.
