“I get a lot of calls like this. You are working your tail off to make ends meet, you do the right thing and call your car lender and ask for a couple of days until the next payday to get current, and just like that – they pull the rug out of your whole life. Maybe you leave after work to find your car is gone. Or maybe they took your car in the middle of the night. Maybe in hindsight you recognize the loaded questions the lender’s phone rep asked you when you were reaching out to them to do right thing: “Are you still working at…” “Do you still live at this address…” “Where is the car now…” Think they don’t do this? Think again.
Did you know bankruptcy allows you to keep your car, restructure the payments, lower the interest rate, and, if your car was just repossessed, actually get the car back from the creditor and allow you to resume making the payments? Most of my clients don’t know this or just hear rumors about it. It’s true.
If you have a car at 29.99% interest or maybe 34.99% interest, Chapter 13 bankruptcy allows us to lower the interest payment substantially, typically to the middle single digit range. This savings alone, on one debt, is often enough to pay for the entire bankruptcy proceeding.
Or perhaps you bought a car two and a half years ago (or in bankruptcy lingo, more that 910 days ago). In these cases, you may be able to lower the actual amount you have to pay on the car to what it’s actually worth.
Here’s an example: Because of your poor credit, you get roped into paying $10,000 for a 1998 Ford Explorer at 34.99% interest over 7 years. Two and a half years later, your still owe $8,600 on the car (even though your already paid about the same interest!). In chapter 13 bankruptcy, you can restructure the car loan, pay the ACTUAL value of the 1998 explorer (perhaps $1,000) at a much lower interest rate (perhaps 7%) over perhaps 36 to 60 months. This is how chapter 13 can work for you.
Or perhaps you had a repo, the car was sold at auction, and now the lender is trying to make you pay for the deficiency balance. Bankruptcy typically erases the deficiency amount so you pay nothing on it. In fact, in the vast majority of my repo cases, if the repo happened a while ago, bankruptcy completely eliminates the need to pay anything on the deficiency balance. No phone calls, no garnishments, no lawsuits. No liability for you.
If you are afraid to look out the window in the morning because your car is up for repo, call my office right away. I may be able to help fix this along with you other debts issues.”