If you have suffered a financial crisis such as losing your job or being out of work because of a serious illness, you may have fallen behind on your car payments. Once you are behind on your car payments, the lien holder may repossess your vehicle leaving you with no means of transportation to get to work or take your children to school. In Michigan, we can stop the repossession with a bankruptcy case.
As soon as your bankruptcy case is filed, the automatic stay provisions of the Bankruptcy Code prevent the creditor from repossessing your vehicle or taking any other action to collect the debt without first obtaining permission from the bankruptcy court. In most cases, you can arrange to keep your car through the bankruptcy filing so that you can continue to have reliable transportation for you and for your family.
How can a bankruptcy case help me keep my vehicle?
As a Michigan bankruptcy attorney, Gene F. Turnwald understands how important it is for you to have reliable transportation so that you can earn income to pay your bills. Filing a bankruptcy case will stop repossession and help you keep your vehicle. In a Chapter 13 bankruptcy, you will be able to make new payment arrangements for your vehicle. You can spread out the entire loan balance over a 3 to 5-year bankruptcy plan often at a much lower interest rate. In some cases, you may be able to lower the amount owed on the vehicle by valuing the lien at the current market value of the vehicle and only pay a percentage of the remaining balance through your bankruptcy plan. Filing a Chapter 13 Michigan bankruptcy case will help you keep your vehicle, solve your debt problems and recover from the financial crisis that caused you to fall behind in your car payments.
How can a Chapter 7 bankruptcy stop repossession?
When you file a Chapter 7 bankruptcy case, the same automatic stay goes into effect as in a Chapter 13 bankruptcy. However, if you are unable to pay your car payments, the creditor can file a motion to modify the automatic stay to continue its repossession. Some creditors choose to wait until the Chapter 7 case has ended to take any action; therefore, you could have up to four months before the vehicle is repossessed.
Through your Chapter 7 bankruptcy, you may be able to work with the lien holder to reaffirm the debt and place the past due portion at the end of the loan. You may also be able to redeem the vehicle for its current market value by paying the lien holder a lump sum equal to the current market value. Some individuals are able to obtain loans from their retirement account or from a relative to pay the market value and retain the vehicle.
Even though a Chapter 7 bankruptcy does not afford the same options for retaining your vehicle as a Chapter 13 case, filing a Chapter 7 bankruptcy can give you time to catch up your payments. Filing a Chapter 7 bankruptcy will also relieve you of the legal responsibility to repay your unsecured debts thereby giving you more income to possibly retain your vehicle.
A personal story of repossession
Mark was unemployed for several months and fell behind in his car payments. He was on the verge of repossession when he found another job. However, he did not have the money to catch up the car payments before the lien holder was ready to repossess the car. Mark contacted our office for a free bankruptcy consultation. He chose to file a Chapter 13 bankruptcy case to save his vehicle. We valued the lien on Mark’s vehicle at the current market value so that he only paid that amount to the lien holder at a much lower interest rate. The remaining balance was paid with the rest of Mark’s unsecured debt at pennies on the dollar. Mark no longer had a car payment because it was included in his bankruptcy plan. His bankruptcy plan payment covered his car payment and the credit card and medical debt that he had accumulated. He was able retain his vehicle and solve his other debt problems at the same time.
We can help you stop repossession and save your vehicle by filing bankruptcy. Contact our office today to schedule a free bankruptcy consultation. Attorney Gene F. Turnwald has helped individuals just like you keep their vehicles and solve their debt problems through the bankruptcy process. Attorney Turnwald has over two decades of experience assisting individuals find affordable solutions to their financial problems.