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How can I stop my car from being repossessed

“Can bankruptcy save my vehicle from being repossessed?” is a common question that many people ask when they are considering bankruptcy.  Of course the answer depends on the debtor’s particular circumstances but in general a bankruptcy provides options to save a vehicle that are unavailable outside of bankruptcy. 

Outside of bankruptcy, if you fall behind on your car loan your creditor will likely repossess and sell your vehicle leaving you stranded without your car and stuck with a deficiency judgment to boot.  However with a Chapter 13 bankruptcy, you may be able to keep your vehicle while paying your past due amounts over time.   A Chapter 13 bankruptcy involves a payment plan from 36-60 months.  If a debtor has fallen behind on their car payments, a Chapter 13 bankruptcy may allow them to catch up on their payments by paying their arrears over the length of their plan, while retaining their vehicle.  In addition to paying arrears over time a Chapter 13 can reduce your interest rate and your monthly car payment by having it paid over the length of the plan as well.  In other cases Chapter 13 can allow you to repay the entire balance of your car over time while reducing the interest rate you are currently paying. Last but certainly not least, with a couple qualifiers a Chapter 13 has the ability to cram down the principle amount owed on a car loan if the loan exceeds the value of your vehicle.       While bankruptcy is usually the last resort for a debtor looking at other options, considering some of the advantages of bankruptcy compared with the pitfalls of those “other” options, bankruptcy may be the most advantageous.  Despite the horror stories that force many into bankruptcy, the bankruptcy itself may not only assist the debtor with outstanding debts but may also help them retain assets that would be lost otherwise.  Whether you’re facing repossession, foreclosure, a garnishment or simply wish to get your debts under control, bankruptcy may be an option worth exploring.  Considering that many attorneys, myself included, don’t charge for a bankruptcy consultation, it is definitely worth your effort to find out.

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