Can bankruptcy stop car repossession?
I am three payments behind on my car and the lender is threatening car repossession what do I do?
The car repossession has already happened can bankruptcy help me?
If your car repossession has taken place you may be able to get your car back by filing a Chapter 13 bankruptcy. The filing of the bankruptcy stops all legal action against you and your property. If your car has been repossessed but the vehicle has not been sold by the lender you can stop car repossession now and get the car back back by filing for a Chapter 13 bankruptcy. If the car repossession has not yet taken place but the creditor is looking for the vehicle then you can file a Chapter 7 and stop them from repossessing the car.
Having Bad Credit Can Increase the Interest on a Car Loan
Filing a Chapter 13 bankruptcy is a way to reduce the interest rate on a car loan. Often times, people who have bad credit get bad interest rate on their car loan; 20 or 30 per cent interest is not uncommon, but which is not competitive for a car loan, difficult to maintain, and only promotes further debt to the borrower. On the other hand, the maximum interest rate someone would pay in a Chapter 13 is what we call Prime Plus. Let’s say for example that the prime interest rate is 3.25 per cent. You may be charged that rate plus 1 to 3 per cent. So, you could be looking at a range of 4.25 to 6.25 per cent, which is much better than the 20 to30 per cent interest that you might otherwise have on your car loan.
Stripping a Lien can ease a debt burden.
A lower interest rate is one of the main reasons that I would recommend someone go into Chapter 13. Another reason might be to strip a lien. If you have multiple liens on a property, for example but the value of that property does not exceed that of the first mortgage, you could actually reclassify those liens to second or to thirds as unsecured debt and get them removed from the property, not just discharged but removed from the property entirely, if you make it all the way through the bankruptcy plan to a discharge. That is how Lien Stripping works with respect to real property. You can also clamp a property down to current market value. If you own multiple properties and you have investment properties that are worth less than what you owe on it, you can actually pay that property in full through the plan and discharge the remaining balance so that you only pay what the property is worth at the time of filing.
But we have done this on second houses too. We have cases where owners are basically buying their second house through the Chapter 13 plan, while discharging the remainder of the liability. That was a very popular situation in 2010 and 2011 when the property values actually plummeted below their loan values.
The Process of Lien Stripping Can also be Applied to Vehicles under Certain Conditions
You can strip a lien on a vehicle, keeping in mind the recent changes to the law dictating the requirement that you possess the vehicle for at least two-and-half years in order to qualify for that process. We can do that though as a result of what we call the vehicle’s rapidly depreciating asset value. Just as in real property where the value of the property is less than what is owed, now our vehicle is worth less than the loan on the vehicle.
If you are behind on your car payments or your car is in danger of being repossessed you can stop car repossession now. Just call the Law Office of Brad Weil to stop car repossession. (310) 515-7799