Has Your Vehicle Been Repossessed?
In many financial circumstances, creditors go after the debtor’s vehicle as a means of debt collection. If you are falling behind on payments of your car or other financed item, you may be facing repossession. This can be one of the most embarrassing and frustrating circumstances to face. Missed vehicle payments may have resulted in a disastrous situation and may have made your life very difficult to manage. If the company you owe money to has taken action to repossess your vehicle, we can help you get the legal assistance you need. To learn more, contact a Charlotte bankruptcy attorney at the Law Office of Jack G. Lezman, PLLC today.
How Chapter 7 Bankruptcy Can Protect Your Car From Repossession
When you file Chapter 7, you get an automatic stay from all adverse creditor actions. This includes repossession. While your creditors can fight this maneuver and, even if they don’t, it only buys you time, in some cases it will be just enough time to rehabilitate your delinquent debt and pay off the balance on loan. Your lender will not be able to repossess or sell off your car until they have gained the court’s permission and notified you. This, in and of itself, will take some time. A Charlotte repossession attorney can help you determine if this is the best course of action.
Recovering a Car That Was Repossessed
If your car has been repossessed by the lender you can forestall the sale of the car by filing for Chapter 7 bankruptcy. This prevents the lender from selling off the car until they get permission from the court. While they may be inclined to attempt to resell the car again, to do so would mean allowing the remainder of the debt to be discharged in bankruptcy.
Another — perhaps better — option is to attempt to redeem the car for the fair market value. In cases where the difference on your loan exceeds the value of the car, you can buy back the car after filing for Chapter 7. While logistically, you can buy back the car anyway, it generally only makes sense to do so when the balance on your loan is greater than the value of the car. Otherwise, you can use that same money to buy another car at the fair market value.
There are two things to understand about the process of redeeming a car in Chapter 7. Firstly, you will need to file a motion with the court to pay off the balance of the car. Secondly, you will need to be able to make that payment in one lump sum. It’s not a perfect solution and will be out of reach for some folks, but is one option to recover a car that’s been repossessed by the lender.
A Charlotte repossession attorney can help you decide on the best course of action.
Even If You Don’t Get Your Car Back, Chapter 7 Can Help
Even though they took your car back, you still owe them money — unless, of course, you discharge it in Chapter 7. If a lender attempts to resell a car but gets less money than the balance on the loan, they can come after you for the discharge. This is known as a deficiency balance.
When Should You File for Chapter 13 Instead?
Chapter 13 handles secured loans much better than does Chapter 7. Chapter 7 manages unsecured debt. Secured loans, like a car loan, cannot really be discharged in Chapter 7. In Chapter 13, however, you can work out a repayment plan that organizes your debts into manageable payments. This includes such things as mortgage payments, car payments, and other secured debt.
Chapter 13: If Your Car Has Not Yet Been Repossessed
If your car has not yet been repossessed, then filing for Chapter 13 can provide the same automatic stay that Chapter 7 does. In addition, because it is particularly well suited to managing secured debt, it may offer you a much better opportunity to actually keep your car. The best news, however, is that your lender will be prevented from making a move on your car until after your Chapter 13 bankruptcy has been processed.
After your Chapter 13 bankruptcy has been processed, you will need to make payments on both the arrearage (the amount you have fallen behind) and the monthly payments. If you do so, the lender will not be able to repossess your vehicle.
However, you must continue to make payments on the vehicle while your Chapter 13 bankruptcy is being processed. A Charlotte repossession attorney can help you prevent your car from being repossessed.
Chapter 13: If Your Car Has Already Been Repossessed
If your car has been repossessed and you both want to keep the car and are filing for Chapter 13 bankruptcy, you should contact a Charlotte bankruptcy attorney immediately. Basically, Chapter 13 bankruptcy reorganizes your past debt so you will need to be able to make payments on both the delinquent balance and pay for the current monthly payments. If you can do so, a repossession attorney can help you get the repossession reversed.
Other Benefits of Chapter 13 Bankruptcy
Under certain conditions, you can reduce your future payments on a secured loan including a car loan. When the value of the car is worth less than the remainder on the loan, the loan can be adjusted to reflect the current value of the car. You may also be able to lower your interest rate if your interest rate is high. This is known as a “cramdown”. There are, however, some limitations on this practice.
Firstly, there are some types of property that are not eligible for a cramdown. You cannot alter the terms of a mortgage, for instance. In addition, recently acquired property would not be eligible for a cramdown, so if you purchase a Mercedes and then head to the courtroom to file a Chapter 13, you won’t be able to reset the terms.
Lastly, the cramdown option is a one-time-only offer. If your Chapter 13 case is dismissed due to lack of payment, you will not be able to reset the terms of the original loan against. It will default and your car will likely be repossessed.
Protect Your Property From Repossession
At the Law Office of Jack G. Lezman, PLLC, we have the tools and experience to guide you through this difficult circumstance. When you file for bankruptcy, repossession actions will immediately have to cease. This will give you the time and opportunity to resolve this issue. Whether you file under Chapter 7 or Chapter 13, all actions from creditors will stop, including harassing phone calls. There are certain actions that you can take to be able to keep your vehicle or other item that was repossessed. The first step is to have one of our Charlotte wage garnishment attorneys evaluate your situation. We can help determine the best course of action to follow.
We can help you get an automatic stay, which is a temporary solution to your repossession. It allows you the necessary time to solve the debt issue. The Charlotte bankruptcy lawyer that you choose can make all the difference. We can take action to negotiate with your lender to establish a probable and workable solution. It is important to do whatever it takes and to assess each opportunity. Our firm can help you obtain the time to handle your overdue payments or have them forgiven. Each individual’s circumstance is different, which is why a personal evaluation is essential. Contact the Law Office of Jack G. Lezman, PLLC today to speak with one of our personable Charlotte bankruptcy attorney!