Will
Bankruptcy allow me to save my car from repossession?
If you have fallen behind on your car payments, Chapter 13 may be a good choice to prevent repossession. Chapter 13 can stop repossession by giving you a chance to catch up on the late payments over a 3 to 5 year period of time. The late payments, also known as the arrearage, will be allocated into equal monthly payments. For example, let’s say your late payments total $3,000.00 and your Chapter 13 plan runs for the full 5 years. There are 60 months in 5 years, so that means you would pay $50.00 per month for 60 months or 5 years after which time the full $3,000.00 ($50.00 x 60 payments) would be paid in full. There are other costs associated with a Chapter 13, which would increase your monthly payment, but in this example $50.00 per month will be used to catch up on your car note. Of course, you will also be required to make your usual car payment in addition to the Chapter 13 payment. As long as you pay the regular car payment along with your Chapter 13 payment the bank or finance company will be legally prohibited from repossessing your car.
Chapter 7 will have a very different impact on an attempt to repossess your car. Although the filing of Chapter 7 may delay the repossession, it will not prevent the loss of your car, if you are behind on your payments. In the event that you are just not able to afford your car payment, plus the amount required to catch up on your payments within the 5 years permitted under a Chapter 13, then the loss of your car may be inevitable. Repossession, however, does not necessarily erase the money debt owed to the bank. In that case a successful Chapter 7 will eliminate all money owed on the car loan, so that after taking back your car the bank is not ever allowed to collect money from you on this loan.
Contact Heller & Richmond, Ltd. to discuss the best way to protect your car in bankruptcy.
Phone: 312-781-6700 or E-Mail: MRichmond@Hellerrichmond.com.
If you have fallen behind on your car payments, Chapter 13 may be a good choice to prevent repossession. Chapter 13 can stop repossession by giving you a chance to catch up on the late payments over a 3 to 5 year period of time. The late payments, also known as the arrearage, will be allocated into equal monthly payments. For example, let’s say your late payments total $3,000.00 and your Chapter 13 plan runs for the full 5 years. There are 60 months in 5 years, so that means you would pay $50.00 per month for 60 months or 5 years after which time the full $3,000.00 ($50.00 x 60 payments) would be paid in full. There are other costs associated with a Chapter 13, which would increase your monthly payment, but in this example $50.00 per month will be used to catch up on your car note. Of course, you will also be required to make your usual car payment in addition to the Chapter 13 payment. As long as you pay the regular car payment along with your Chapter 13 payment the bank or finance company will be legally prohibited from repossessing your car.
Chapter 7 will have a very different impact on an attempt to repossess your car. Although the filing of Chapter 7 may delay the repossession, it will not prevent the loss of your car, if you are behind on your payments. In the event that you are just not able to afford your car payment, plus the amount required to catch up on your payments within the 5 years permitted under a Chapter 13, then the loss of your car may be inevitable. Repossession, however, does not necessarily erase the money debt owed to the bank. In that case a successful Chapter 7 will eliminate all money owed on the car loan, so that after taking back your car the bank is not ever allowed to collect money from you on this loan.
Contact Heller & Richmond, Ltd. to discuss the best way to protect your car in bankruptcy.
Phone: 312-781-6700 or E-Mail: MRichmond@Hellerrichmond.com.