Featured News 2013 Is Your Car Payment Unaffordable?

Is Your Car Payment Unaffordable?

Many people think of bankruptcy as a way to avoid credit card debt or to save a house that is about to be foreclosed. Not often do people think of bankruptcy as a way to rescue a car. If you are behind on your car payments or the expense of owning a vehicle proves to be unaffordable, then bankruptcy may be a noteworthy option. This is especially true of you have a good job and need your car in order to have the transportation necessary to make it to your office every day. The option to filing for bankruptcy is defaulting on your payments and having the car seized, or selling the vehicle. If you have places to be and need a car to get there, then these others options may prove to be impossible.

Instead, you will need to file a Chapter 13 bankruptcy or opt for a Chapter 7 if you don’t think that you can afford a payment plan. A Chapter 7 bankruptcy will mean that you will have to liquidate your assets in order to pay off all your debts and start from scratch. In a Chapter 13 bankruptcy, you will be able to restructure all of your debts into a repayment plan and can be sure that you will not be threatened by creditors or harassed as you work diligently to pay off the expenses. One of the reasons that many people opt for a bankruptcy when they are behind on car payments is because the debt is dischargeable. This means that after you file, some of the debt (or in some cases all of the debt) may disappear and you will be left with the vehicle you were given. Other debts, such as child support and student loans are not dischargeable.

Here’s an example of how a bankruptcy may save someone who is in need of financial assistance regarding car payments. Recently, a driver purchased a Nissan Maxima but had to opt for a higher interest rate because he did not have the best credit. This man purchased the car fully intent on paying the costs every week but then he received a pay decrease at work. Suddenly, his minimized payment left him unable to make his car payments and still manage the other expenses of his daily life. In addition to this dilemma, the driver’s car was “underwater.” This is the term used when a car retails at less than to total cost of the loan on the vehicle. This means that he was paying significantly more than the car was worth in order to cover the cost of the loan. This individual only had about $4,500 in credit card debt, but he wanted to fix his car situation.

He was able to discharge the expenses of the car in a bankruptcy. In most situations, if a loan is obtained by honest means, and the car company cannot bring up any discharge defenses, then the debt can wiped out in a bankruptcy. As a result, the bank will maintain a lien on the vehicle that was listed. While the bankruptcy is going on, the car will probably need to be surrendered to the bank. This may be a temporary inconvenience, but it is better to lose your car for a few months than to lose it forever. You may need to secure a replacement car for a short amount of time until the car is given back to you at the end of the bankruptcy. If you are not able to obtain your car, then you still won’t have to pay the car payments on it. This will be very helpful as you try to establish better financial patters in your life. Contact a bankruptcy attorney today if you feel this is the best way for you to avoid your car payments.

Related News:

Documents You Need to Show your Bankruptcy Attorney

Filing for bankruptcy demands organization. You will want to have papers put in proper places. You will need to have important information indexed on your computer. You will need to gather recent bank ...
Read More »

British Company HMV Enters Into Bankruptcy

HMV is a British music retail chain that has been in business since 1902. Now, after over a century of success in the United Kingdom, the company is finally declaring bankruptcy using the British ...
Read More »

Typical Errors Committed on the Means Test

Whether you are filing for Chapter 7 or Chapter 13 bankruptcy, you will have to complete a means test. This test decides whether or not you qualify for Chapter 7 bankruptcy, and it also factors into ...
Read More »