Some people have a misconception that declaring bankruptcy may lead to higher car payments or even immediate car repossession. However, many safeguards are available to keep your vehicle safe.
Bankruptcy and Car Repossession: Protecting Your Vehicle
When you file for bankruptcy, you can receive immediate protection for your vehicle through an “automatic stay,” which prevents creditors from repossessing your car while your bankruptcy process is ongoing. Automatic stays typically last until your case is closed. But in some cases, they may be denied if you have filed multiple bankruptcies in a year. Creditors can also ask the court for permission to lift this stay, especially if you cannot make timely payments.
Reaffirming Car Loans in Bankruptcy
During bankruptcy, you’ll have the choice of reaffirming your car loan or agreeing to continue making regular payments. Reaffirmation helps you retain your car and rebuild your credit after the process. On the downside, if you later default on the loan, the lender can repossess your vehicle and file a claim against you for the unpaid balance.
Exploring Auto Loan Modification Amidst Bankruptcy
Another viable alternative to reaffirming your auto loan is through modification. If you filed a Chapter 13 bankruptcy, you can negotiate a lower interest rate, extend the loan term, or even lower the principal balance of your loan to make payments more manageable.
Protect Your Assets After Bankruptcy
With the right strategies and legal advice, you can safeguard your assets, including your car, and get the financial relief you need. At Todd Cushner & Associates, our bankruptcy lawyers help you navigate your case. Please contact us if you have questions or want to schedule a free consultation today.
