There are a number of opinions on how to avoid car repossession. The easy one is make all of the payments. Well, the problem is that it is not always easy to just make all of payment on time. If you can get help from a friend or family member to help you through the rough patch that is great. Talk to your vehicle loan company too and make sure you have exhausted all options with them before taking additional steps.
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Ryan C. Wood, Partner
Kitty J. Lin, Partner
Bankruptcy Can Prevent Repossession and Possibly Reduce Your Loan and Payment
It is possible in both a Chapter 7 bankruptcy and Chapter 13 bankruptcy to reduce that amount you owe on your vehicle loan. In a Chapter 7 case you may redeem the vehicle for its fair market value. In a Chapter 13 bankruptcy case you may cram-down or only pay the fair market value of the vehicle. In both cases the value of the vehicle must be less than what you owe and the vehicle must have been purchased at least 910 days prior to the date the bankruptcy case was filed.
Cram-down in Chapter 13
In a Chapter 13 case the amount your pay is crammed down to the fair market value of the vehicle at the time the case was filed. If you owe $15,000 and the vehicle is only worth $10,000, then you will pay $10,000 for the vehicle in your Chapter 13 Plan of Reorganization. This will usually result not only in a reduction of the total you pay, but reduce your monthly payment to. See Reduce or Cram Down a Vehicle Loan
Redemption and Chapter 7
To redeem a vehicle for its fair market value in a Chapter 7 case a motion must be filed with the court to approve the redemption. To redeem the vehicle a lump sum payment of the fair market value of the vehicle at the time of filing must be paid the existing vehicle loan company. This is usually where a problem arises. There are companies that exist that will give you a new loan to make the redemption work.
With offices in Redwood City, San Francisco, San Jose, Fremont and Oakland we represent clients throughout the Bay Area including San Mateo County, Santa Clara County, Alameda County, Contra Costa County, Burlingame, Daly City, Foster City, Half Moon Bay, Millbrae, Pacifica, Redwood City, San Bruno, bankruptcy lawyers in San Mateo County, South San Francisco, Cupertino, Gilroy, Los Gatos, Milpitas, Mountain View, Palo Alto, Santa Clara, Sunnyvale, Concord, Danville, Martinez, Pittsburg, Pleasant Hill, Richmond, San Pablo, San Ramon, Walnut Creek, Berkeley, Dublin, Hayward, Livermore, Pleasanton, San Leandro and Union City.