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Bankruptcy can help you keep your car and in some cases lower the monthly payment. If you keep telling yourself, “I cannot afford my car payment” over and over again it is probably time you to find out how bankruptcy can help. If you think you cannot pay your car loan anymore it is time to find out whether bankruptcy can lower your car payment. All of our consultations are free and with experienced attorneys, Ryan C. Wood or Kitty J. Lin.
As soon as your case is filed the automatic stay takes effect stopping all collection actions against you including repossession of your vehicle if you are behind on the payments. If you qualify to file a Chapter 7 bankruptcy you can redeem the vehicle, reaffirm the debt or surrender the vehicle. In a Chapter 7 case your vehicle can be redeemed for its fair market value. If the value of the vehicle is far less than what you owe there can be a significant savings. A motion must be filed with the court accomplish this and you must have purchased the vehicle 910 days prior to the case being filed. Almost all car loan companies will also allow you to continue to make the normal monthly payment without reaffirming the debt or redeeming it. This means there is no legally enforceable new signed writing after you receive your discharge. Months after the bankruptcy case is completed if you can no longer pay the vehicle loan and choose to turn the vehicle in there can be no deficiency balance charged to you.
A Chapter 13 bankruptcy will reorganize your debts based upon your income, expenses and assets. There are two different ways to reduce your vehicle loan payment in a Chapter 13 reorganization case. The first is reorganizing your vehicle loan by redoing or spreading out the payments in the Chapter 13 Plan. You are basically creating a new vehicle loan payment schedule spread out over 36 or 60 months. This will reduce your monthly payment for your vehicle and should make it affordable. The second way is even better for you financially. Under certain circumstances Chapter 13 can reducing the total amount owed on the loan of your vehicle and then pay this amount back in the Chapter 13 plan with a reduced percentage rate too. This is called cramming down the vehicle loan in a Chapter 13 Plan. If your vehicle was purchased 910 days prior to the filing of the case and the vehicle is worth less than what you owe Chapter 13 could allow you to pay less for the vehicle.
In most bankruptcy cases vehicles that are paid in full can be protected by exemptions and allow you to keep the vehicles. The exemptions are limited though. If you have two or more vehicles worth quite a bit of money there are a number of options when filing bankruptcy to protect the vehicles. During your free consultation with bankruptcy attorney Ryan C. Wood or Kitty J. Lin you will discuss what is best for you.
We are bankruptcy lawyers in San Jose with offices in Redwood City, San Francisco, San Jose, Fremont, Oakland and we represent clients throughout the Bay Area including San Mateo County, Santa Clara County, Alameda County, Contra Costa County, bankruptcy attorneys in Palo Alto, Santa Clara, Sunnyvale, Berkeley, Hayward, Livermore, Pleasanton, San Leandro and Union City.
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