Lowering Your Monthly Car Payment With The Help Of A Bankruptcy Attorney
Many people have crushing car loans that are difficult to keep up with. They may wonder if filing for bankruptcy can help lower their monthly car payment. Depending on the type of bankruptcy you file and your particular circumstances, you may be able to lower your car payment. A bankruptcy lawyer can explain how to lower your car payment through this process.
What Happens To My Car In Bankruptcy
If you own a car or lease a car, you will need to decide what happens to your car in bankruptcy. You have the choice to keep your car and the debt associated with it, or you can choose to surrender the car in bankruptcy. This means the car goes back to the lender, and the debt goes with it. There are one or two exceptions, which we will address. In summary, you can either keep the car and the debt, or get rid of the car and get rid of the debt.
Can You Keep Up With The Payments
If you have expensive car payments each month, and if those payments are the cause of your financial problems, it may be wise to surrender the car to the lender before you go bankrupt, even if your payments are up to date. Bankruptcy should be a fresh start, and keeping high car payments may not be a fresh start for you.
Your Ontario bankruptcy trustee can help you analyze your situation and help you decide whether or not to keep your car if you file for bankruptcy in Ontario.
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Ease The Burden Today Schedule A Consultation
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As with many legal issues, minutes matter. The evidence fades, witnesses disappear, and the stories change. If youre facing an urgent legal matter, Cravens & Noll can provide hope to your situation.
Surrendering The Car To The Lender
If you still owe a lot on your vehicle at high interest rates or if it was slated to be repossessed, you could let your car go back to the lender.
Car payments may have contributed to your need for bankruptcy in the first place. In Chapter 7 bankruptcy qualifying debt gets erased and your car payments can be included in your written discharge of debts if you surrender it.
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If You Fully Own The Caryou Lose It In Bankruptcy If Its Worth More Than A Certain Amount
If there is no loan or lien on your vehicle, then your bankruptcy trustee will assess your vehicles value. In most provinces across Canada, if you go bankrupt, you get to keep one vehicle that is worth up to a certain amount depending on your province. Here are the maximum vehicle values for the following provinces:
- Ontario: $6,600
- Manitoba: $3,000
- Saskatchewan: $10,000
If your vehicle is assessed and found to be worth more than the allowed maximum in your province, you can redeem it from being taken in the bankruptcy by paying the difference between its appraised value and the maximum limit. So if your province allows you to keep a vehicle worth up to $5,000 and yours is appraised at $6,000, you could pay your trustee the $1,000 difference. He or she would then put this $1,000 into the pool of money that they would send to your creditors. You would then get to keep your car and not lose it in the bankruptcy.
Pay And Drive In Bankruptcy Law
You may have heard of the concept of pay and drive in bankruptcy law. The law allowed drivers to keep their vehicles as long as they stayed current on payments. Pay and drive hasnt been a part of bankruptcy law since 2005. You must pursue one of the other options to keep your vehicle in a Nevada bankruptcy.
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What Does It Cost To File For Bankruptcy
The Bankruptcy Court collects a fee to file a bankruptcy petition. It now costs $299 to file for bankruptcy under chapter 7 and $274 to file for bankruptcy under chapter 13, whether for one person or a married couple. The court may allow you to pay this filing fee in installments if you cannot pay all at once. If you hire an attorney to represent you in your bankruptcy case you will also have to pay the attorneys fees you agree to.
Returning The Vehicle Bankruptcy To Get Out Of A Car Loan
Sometimes the best option is returning a vehicle with a car loan to the lender. Then you’ll be out from under the car loan entirely. Many bankruptcy filers will return a fianced car to the lender when they:
- paid too much for the vehicle
- can’t afford the monthly payment, or
- don’t want the vehicle or the car loan associated with it.
If you’re in this situation, you’ll check the box that states that you plan to “surrender the property” when you’re filling out the Statement of Intention for Individuals Filing Under Chapter 7form. You can also surrender a car with a car loan in Chapter 13 bankruptcy.
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What Happens To My Car Or Vehicle When I File For Bankruptcy
Auburn Bankruptcy Attorneys
Stop your vehicle repossession now! Filing for bankruptcy and your car.
What happens to my car or truck when I file for bankruptcy? How can I stop a car or property repossession?Your car in bankruptcy
When many of our Auburn bankruptcy clients first contact our offices, they are very concerned about losing their vehicle. And, rightfully so. How can you even get to work without a car? Unfortunately, there’s a lot of confusion out there regarding filing for bankruptcy and what happens to someone’s care when they do so. Here’s what you need to understand.
If you can afford to keep making your payments after wiping out your creditors, bankruptcy is often one of the most effective ways to keep your car from being repossessed. Bankruptcy offers ways to shed debt while holding on to one of your most important assets your car. If you are making payments on a car, you can usually keep the car in bankruptcy so long as you keep making the payments. Bankruptcy can also offer ways to restructure your payments to make them more affordable, Most importantly, filing for bankruptcy improves your monthly cash flow to make payments easier to handle.
The redemption option involves paying off the balance of the car loan at the value of the car. This option makes sense if the car is worth a lot less than the loan balance. Some finance companies can loan you money while you are in bankruptcy to redeem the car.
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Do I Get To Keep My Car In A Chapter 7 Bankruptcy
The question of whether or not you can keep your car in a Chapter 7 bankruptcy process is a very common one.
Unfortunately, as is so often the case with bankruptcy matters, the answer is, It depends.
Normally, in a Chapter 7 bankruptcy, your goal is to wipe out your unsecured debt. It is not necessarily always also the case that you want to slide out from under a burdensome vehicle loan, although this is sometimes true.
Many are concerned that, if they file for bankruptcy, they will lose a needed vehicle, leaving them unable to commute to work, get to doctors appointments, shuttle kids back and forth to school, and to attend lifes other necessities.
The fear of losing a car can cause people to hold off on even having an initial conversation with a bankruptcy attorney.
It is important, first of all, to not be alarmed. Fear should not prevent you from exploring your legal options.
In a typical Chapter 7 bankruptcy case, most people do get to keep their carsif they want to.
However, whether or not you can will depend, firstly, on whether you are still making payments on the car or whether your own it free of any title-encumbering lien.
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Reaffirming Your Car Loan
Once your bankruptcy is completed, your lender may require that you reaffirm your car loan. This is because once your bankruptcy is finished, your original car loan will be wiped out and you wont be responsible for making payments. Most car lenders require this loan reaffirmation, and it is one way the lender is protected if you default on the loan once again.
Those who file Chapter 7 must indicate they plan to reaffirm their car loan on the statement of intent form . Your lender has to agree to reaffirmation as does the judge. Depending on the circumstance, a lender who agrees to a reaffirmation plan will send an agreement to either your attorney or the judge. Your attorney must approve your plan for reaffirmation.
If you should default on the loan again, another Chapter 7 filing wont be an option for you. You cannot file Chapter 7 again for eight years following the discharge of a Chapter 7 filing.
Even when your car is worth more than the exemptions you are entitled to, the trustee may decide not to sell your car so that you can continue to go to work and fulfill your obligations.
Keeping Your Car With A Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is a debt consolidation program designed to help protect your property and re-establish payments with your creditors if you have fallen behind. The program offers many unique benefits that can actually help you keep your vehicle, improve your payment terms and re-establish your credit.
The Chapter 13 plan prioritizes payments to secured creditors, such as your car loan. Payments to general unsecured debts are deferred until a later time. Most often, general unsecured debts are significantly reduced or eliminated under the program . The program is designed to create a balanced budget based on your income and expenses. This means you can file bankruptcy and keep your car!
If you have gotten behind on your vehicle payments, the Chapter 13 plan can bring your account current through the debt consolidation process. The Chapter 13 bankruptcy will protect your car from a repossession. If your vehicle has been repossessed, a Chapter 13 will help you to get your car back provided it has not been sold at auction.
Improving Your Payment TermsIn short, the Chapter 13 program is a way of refinancing your vehicle as well as consolidating other debts. There are several ways that the Chapter 13 plan can improve your payment terms on your vehicle loan.
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To Reaffirm Or Not Reaffirm
A reaffirmation agreement is a contract that reinstates a debt as if the bankruptcy never happened. You have to look at them closely, however, because sometimes they change the original terms. They have to be filed with the court before the date of discharge. They also have to be approved by the judge assigned to your case. If your lawyer will sign off on the agreement, the judge will probably not require a hearing before approving. If your lawyer won’t sign off on the agreement – and I do say no sometimes – then you still have a right to do the agreement, but there almost certainly will be a hearing. And I hate to tell you this, but your lawyer is obligated to go with you to that hearing whether he or she thinks it’s a good idea or not.
Reaffirmations are usually just not done in Chapter 13 cases. In a Chapter 13 bankruptcy, assuming there is a car with a loan that you want to keep, the payment Plan will require that the loan is to be paid. Most of the time the plan will say that you will just pay the loan directly to the lender yourself as you did before. About the only time you wouldn’t pay directly would be in a cram down situation, which I’ll explain later. The Plan is legally binding on you and the lender, so once it’s confirmed you shouldn’t be hearing any complaints from the lender – because the plan is a lot like a reaffirmation agreement.
What Is Equity Of The Car Value
The equity in your car is essentially the fair market value of your vehicle minus the remaining balance of your loan. Therefore, if you still owe $11,000 on your vehicle and the fair market value is $8,500, then you have no equity. While this might be financially frustrating, it does mean that your car has no value in the bankruptcy estate and is protected from being sold without the aid of an exemption.
However, if you do not currently have a car loan, the equity is the full fair market value. This could prove troublesome under bankruptcy. If you file for Chapter 7 under these circumstances, you could be required to turn your vehicle over to the trustee to be liquidated or have your case converted to Chapter 13, where you would be required to pay the value of your car to unsecured creditors. It is critical to discuss the value of your vehicle with our seasoned bankruptcy attorney before filing.
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Your House In Chapter 7 Bankruptcy
If you file for Chapter 7 bankruptcythe kind that gets rid of debt most quicklyyou can keep your house under two conditions: Youre current with your mortgage payments when you file , and the laws in your state allow you to protect all of the equity you have in the property. By giving you relief from other kinds of debts, like credit card or medical bills, bankruptcy can free up money to help you keep up with your mortgage. Most of our readers had this experience: 68% of those who went through Chapter 7 bankruptcy were able to keep their home.
If youve already fallen behind on your mortgage payments when you file for Chapter 7 bankruptcy, youre likely to lose your house. Filing for bankruptcy lets you stay in your home another month or two, but ultimately, the bank will foreclose on the property. But if the foreclosure sale price is less than what you owe on the mortgage, your remaining mortgage debt can be discharged in bankruptcy. Our readers who lost their houses reported an average discharge of $130,000 in mortgage debt after filing Chapter 7.
How Do I Surrender My Car In Bankruptcy
If you want to surrender the car and the debt, it is easy. We file your bankruptcy and reach out to the car lender to make arrangements for them to pick up the car or have you drop off the car in the alternative. The upside to addressing a car in bankruptcy is that you have options. Most clients are incredibly happy with the results of bankruptcy including the ability to have flexibility regarding vehicles. The rules of bankruptcy heavily favor the debtorthe person filingand as a result, if you would like to keep a vehicle while discharging all unsecured debt, it is almost always an option.
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Will Michigan Bankruptcy Let Me Keep My Car
One of the largest concerns individuals have when filing bankruptcy is whether they can keep their motor vehicle. We all need to get to work, school, or life. Without the benefits of proper mass transit, many of us demand on our cards. In almost all cases, whether in Chapter 7 or Chapter 13 bankruptcy, you will be able to keep you vehicle.
Keeping Your Home In Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, the court will liquidate most of your unsecured debts thats debt like credit card debt and personal loans, that isnt attached to an asset like a house or a car. Once that debt is out of the way, it should make it easier to make your mortgage payments.
If you cant pay your mortgage after bankruptcy, the result will be the same as not paying it before bankruptcy you eventually will lose your home.
If you know you are going to file for bankruptcy and want to keep your house, you can see if your mortgage lender would work with you on modifying your mortgage agreement in a way that would allow you to catch up on your payments. Do this before you file for bankruptcy. Once you file, the court takes over your assets and its out of your hands.
Here are some of the things that make it more likely your house will be protected if you file for Chapter 7 bankruptcy:
- You are up to date on mortgage payments
- All, or most, of your equity is protected with an exemption
- You owe more on the house than its worth
- You demonstrate to the court you can make your mortgage payments on time
- You negotiate with your lender before you file for bankruptcy on a loan modification.
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Bankruptcy Erases Car Loans But Not Car Liens
Bankruptcy works by breaking the contract requiring you to repay the lender for the car loan. You can file for bankruptcy, give the car back to the lender, and not pay anything further on the car loan.
However, if you want to keep a car with a car loan, there’s a catch. Filing for bankruptcy doesn’t eliminate the lien giving the bank the right to take back your car if you don’t pay as agreed. The bank can use the lien to repossess the car once the bankruptcy case is overor sooner with the court’s permissioneven though you erased the debt. So if you want to keep the car, you must pay for it.
How you pay your car loanand whether you can keep a car if you’re behind on the car loanwill depend on whether you file for Chapter 7 or 13.
Buying a car is costly, and most people can’t afford to pay for one outright. Instead, borrowers finance the purchase by signing a “promissory note” agreeing to pay back the debt with interest in monthly installments.
Because most car loans involve thousands of dollars, banks minimize risk by requiring the buyer to agree to put up the vehicle as collateral. The additional requirement creates a lien on the car that lets the lender repossess the car if the borrower “defaults” by failing to pay.
In bankruptcy, the lien makes the car loan a “secured debt,” unlike a Visa or Mastercard balance, which would be an “unsecured debt.”
