Bankruptcy and repossession situations can be scary and frustrating. Groce & DeArmon, P.C. specializes in bankruptcy and repossession law. We can help you navigate these difficult times with as little stress as possible. When it comes to repossession, it’s important to know your rights and your options.
Typically a repossession case involves your car, and this can be an extremely inconvenient problem to deal with. There are definitely options for you to keep your car or reduce your loan, and make sure you’re not being taken advantage of. Typically the best options are to cure your arrears (missed payments), file for Chapter 7 or 13 bankruptcy, or to allow the repossession in order to pay off the loan through auction.
Curing Your Arrears
This is the most common way to prevent repossession without declaring bankruptcy. If your car is in danger of being repossessed, you can try to work out curing your arrears with your lender. This could include reducing payment amounts or working out a different interest rate. This is definitely the most amicable way to prevent a repossession, but it’s not always within an individual’s financial means.
Chapter 7 Bankruptcy
Chapter 7 Bankruptcy can offer a few options when it comes to repossession. The first being the benefit of an automatic stay. What this does is prevent your lender from taking further collection actions until they obtain court permission. So if your vehicle has been repossessed, they must wait to attempt to bring it to auction. At this point, you can either negotiate with your lender, redeem your car, or allow the car to go to auction.
Negotiating with your lender entails the same process we outlined earlier, which is working out a payment plan, but you will usually have to reaffirm your debt with this option. Redeeming your car is when you buy your car back from the lender at fair market value. This means if your car is worth less than the loan amount, you can pay a lump sum of the market value to clear the loan. Allowing the car to go to auction is an option if you don’t want to keep your car. The lender will sell it to cover the loan balance. If the loan balance is greater, the lender will typically go after you for the deficiency, but Chapter 7 clears you of this liability.
Chapter 13 Bankruptcy
The biggest difference between Chapter 7 and 13 bankruptcy and repossession is the negotiating ability Chapter 13 affords you to keep your car and continue to make payments. With Chapter 7 you may be able to negotiate with your lender, but you’ll have to reaffirm or take personal liability for, your debt again. Chapter 13 Bankruptcy avoids this and is designed to help you cure your arrears. So this is a better option if you want your car back when compared to Chapter 7. This is the best option to work out an easier repayment plan that works for you.
Groce & DeArmon, P.C. Can Help With Bankruptcy and Repossession
Groce & DeArmon, P.C. specialize and are trusted in bankruptcy and repossession law. We can guide you through any bankruptcy and repossession case to make sure we work out the best option today. Contact us for a free consultation with a friendly, professional lawyer from Groce & DeArmon.