A vehicle loan can be a major expense. Sometimes we find we have borrowed more than we can afford or we find our budget has changed due to a drop in income or increase in monthly expenses. These circumstances can make our car loan payments unaffordable. A Chapter 13 bankruptcy lawyer can provide help if you are having trouble making your car loan payments.
Chapter 13 allows you to force the creditor to accept new repayment terms that are easier for you. First, you may lower the interest rate on the loan. Second, you can often give yourself more time (up to 60 months) to get the loan paid in full. If the loan was incurred more than 2.5 years before your Chapter 13 filing, you don't have to pay the full balance owed on the loan and can force the creditor to only accept an amount equal to what the vehicle is worth. If you don't want the car, Chapter 13 may allow you to surrender the car without having to pay the deficiency left after the lender sells the car at an auction. Whether you will be required to pay some, all, or a portion of the deficiency will depend on factors such as your monthly disposable income and whether you have any non-exempt assets.
Chapter 13 also imposes an automatic bankruptcy stay that stops all creditor activity against you and your property. If a creditor has obtained a judgment and is looking to repossess the vehicle, this stay will immediately provide your vehicle protection from repossession. If the car has already been repossessed, the stay will prevent the creditor from selling the car at an auction and may allow you to get the vehicle back.