Can Bankruptcy Help
Stop Repossessions ?
Los Angeles Stop Repossessions Lawyer
If you have fallen behind on your monthly payments for your car, truck, SUV, van or motorcycle and are worried about repossession, or if your vehicle has already been repossessed, you may benefit from filing Chapter 7 or Chapter 13 bankruptcy.
Stop Repossessions in Los Angeles, CA
Once you file bankruptcy, your vehicle cannot be repossessed as long as you remain under the protection of the bankruptcy court. If your vehicle has already been repossessed, it may be possible to get it back.
If you file for Chapter 7 Bankruptcy, the repossession will be stopped, but you’ll have to make arrangements with the creditor to bring all payments current after filing. If you want to keep the car after bankruptcy, you’ll need to sign a Reaffirmation Agreement and make all payments after the bankruptcy.
In you file for Chapter 13 Bankruptcy, the repossession will be stopped and you (the debtor) will then have the opportunity to repay the value of the car to the creditor through the chapter 13 repayment plan. Chapter 13 is beneficial to debtors owing more on a car than what it is worth, since chapter 13 payment plans can actually lower car payments on car loans where the debtor owes more than the car is worth.
Bankruptcy was designed by congress to protect individuals or businesses that are unable to meet their financial obligations. Filing bankruptcy is a serious procedure and should only be considered when absolutely necessary. That said, sometimes it is the best solution for those suffering severe financial hardship. For some, it may be the best and only solution.
What is Repossession?
Repossession is when creditors take back real property and goods that buyers are not making timely loan payments on. Filing Bankruptcy can be particularly helpful in relieving financial hardship by protecting property that may be in danger of repossession. Some loans are “secured,” meaning the buyer has put down some form of collateral typically the actual item being purchased like an automobile. Other loans are “unsecured,” as are most all credit cards. If you default on an unsecured loan, the only option creditors have when collection attempts have failed is to sue for repayment. However, with a secured loan, creditors can repossess the collateral and then sell it to make up for the potential loss. If the repossession (a car for example) and subsequent sale of the secured property comes short of clearing the balance of the loan, then the lender can sue you for the remainder of the loan balance.
Filing Bankruptcy can often help cancel the debt, and will often allow you to stop the repossession process. The minute a bankruptcy petition is filed in bankruptcy court, all creditors are prevented from making any further collection attempts. This is also known as an “Automatic Stay,” which is an automatic order from the bankruptcy court when a bankruptcy petition is filed to notify all creditors. This “Automatic Stay” applies to ALL creditors attempting to repossess collateral even your car, truck, boat, RV, or any other secured property.
If you are considering filing for bankruptcy in order to stop repossession, you should seek out an experienced bankruptcy attorney in order to find out which option will work the best in your particular situation.
What If My Car Has Already Been Repossessed?
If you have filed for chapter 13 bankruptcy and the bank still holds the car (i.e. they have not yet sold it), you can often have it returned to you. Your car loan to the lender will be paid through your Chapter 13 bankruptcy.
Chapter 13 allows you to make payments to your debtors while maintaining some of your assets. This is why you are more likely to have your repossessed car returned to you under Chapter 13 bankruptcy. Other forms of bankruptcy more broadly liquidate your assets, and would make it more difficult for you to keep or have your car returned to you after repossession.
How Automobiles Are treated in Different Bankruptcy Filings
Cram down your loan balance:
If your auto loan is more than 910 days old (think 2-1/2 years), and the amount that you owe is less than the current value of your vehicle, you may be able to “cram down” the loan in a Chapter 13 bankruptcy, paying what the vehicle is worth instead of what you actually owe and oftentimes significantly reducing your monthly payments.
Reduce your interest rate:
If your auto loan is less thank 910 days old (think 2-1/2 years), you may be able to reduce your interest rate, thereby reducing your monthly payment.Negotiate new auto loan terms:
Depending on your unique circumstances, filing a Chapter 7 Bankruptcy may give you leverage to negotiate with your lender for a “reaffirmation of your loan” that reduces your balance, interest rate or repayment term.
Eliminate or Reduce a deficiency judgment:
If your car has been repossessed, your lender may have gotten a deficiency judgment against you. Deficiency judgments can generally be eliminated in Chapter 7. In a Chapter 13 Bankruptcy that same deficiency judgment would likely be reduced to a percentage.
If your car is about to be or already has been repossessed, you should speak to an attorney with experience in bankruptcy cases to determine what filing for bankruptcy would do in your particular situation. Your circumstances will greatly affect which type of bankruptcy you will file, and you will want a professional’s advice on how to best proceed. As you pursue such advice, it is a very good idea to try to maintain a civil relationship with your car lender, and all of your creditors, so that you have better chances of working out arrangements with them in the future.
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