Car Loan and Bankruptcy Filing – How to Balance These Two?
To get to work and keep your life going, you need your vehicle that you have already started investing in. However, the loan payments are difficult to keep up. You owe many other debts. Every month, it's a significant stressor. It is very likely that the amount you owe will be much more than you expect. This is because vehicles are generally sold at auto auctions, which means that your account has less money than you would expect. Moreover, repossession/selling and sale costs would be added to the balance, together with late expenses. It doesn't seem to make sense to give up the vehicle.
If you file for bankruptcy with the help of a bankruptcy attorney in Edmond, OK, your car loan may get easier to manage.
In Relevance of Chapter 7
Two things regarding your vehicle loan are achieved in the case of chapter 7 filed through your bankruptcy attorney in Edmond, OK. First, chapter 7 would probably remove most of your other debts if you want to keep the vehicle. You could perhaps afford to pay for the vehicle. Alternatively, second, Chapter 7 is likely to release (legally cancel) the deficiency balance if you surrender the vehicle. If you had a way to get around or could have done so with another reliable vehicle, your problem could be solved.
It's worse if at the time of your Chapter 7 bankruptcy filing you're unable to pay your loan. You would nearly always need to catch up fast with your vehicle lender — within a month or two of filing. This is in addition to keeping the monthly payments up to date. Otherwise, despite bankruptcy, you'd lose the vehicle.
It's even more problematic if you also let your insurance lapse. Your lender knows how dangerous insurance lapsing is so they might force insurance on the vehicle. Almost certainly your contract allows this to happen. Forced insurance tends to be very costly while providing you with very little coverage at the same time. You probably have to pay for such insurance by Chapter 7, plus you have to restore your insurance. Moreover, that is probably very fast, not long after you've filed your case for Chapter 7 with a bankruptcy attorney in Edmond, OK.
In Relevance of Chapter 13
You can buy a lot more time in Chapter 13 first. A payment plan for Chapter 13 would probably give you much more time to recover from missed loans. You could also spend much more time paying for any insurance under force.
Second, you will probably pay less on the vehicle loan if you qualify for 'cramdown' –perhaps far less. In the case of a vehicle value less than you owe, there is a procedure under Chapter 13 for the legal rewriting of a loan. With that process, both of you can pay less monthly and pay less before your vehicle is clear and free. Moreover, you don't have to catch up on the missed payments if you are behind on the loan payments.
If you are still confused with the bankruptcy law and its relevance with your car loan, you can consult with our professional bankruptcy attorney in Edmond, OK to understand it better. We are Chris Mudd and Associates where you can get expert lawyers specialized for bankruptcy. What are you waiting for?
** Disclaimer: This blog post does not constitute legal advice, nor does it create a client-attorney relationship.