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Car Loans and Chapter 13 Bankruptcy

There are many reasons for people to file for Chapter 13 bankruptcy. One reason in particular is the effect it can have on your car loan. People in Chapter 13 have a chance to reduce their interest rate on a car loan. People with a poor credit rating often get a terrible interest rate on their car loan — 15, 20 percent and even higher. (Learn more about your credit rating here.)

Does Bankruptcy Protect Income From Employment?

One problem that people face when they’re considering bankruptcy is a concern about wage garnishment. That’s why one of the reassuring aspects of Chapter 13 bankruptcy is the protection it offers in regard to being sued or having wages garnished. When you file the bankruptcy, an automatic stay is enforced. It stops all legal action against you — in effect acting like a preliminary injunction against the collection of a debt.