According to the Washington Post; “A record number of 7 million Americans is 3 months behind their car payments” – February 2019. This title says it all. In other words, if you file for bankruptcy and missed your car payments, but you still want to keep your car, you’re not alone.
The Credit Union Journal has a recent article in the May 2019 issue titled; “Do credit unions avoid their roots in avoiding subprime car loans?” It turns out that car loan defaults are once again at historic highs. This is a nationwide problem for lenders, and not just here in Ventura County or Los Angeles County.
There are remedies you can use to prevent your car from being taken back into possession. Many consumers don’t realize that under both Chapter 7 and Chapter 13 of the Bankruptcy Act, you can temporarily prevent your lender from taking back cars. This is because during the bankruptcy proceedings, the court issues an “automatic suspension” that prohibits the lender from taking back possession of your car. The lender can ask the court to remove the “automatic stay” and if the court agrees, the lender can still take possession of the car, but this temporary stay may be all you need to grab the lender’s attention to work with you and your lawyer on a modified repayment plan.
The best way to deal with this situation is to get in touch with your car lender, and it’s best to do this through a bankruptcy attorney, it has more weight. It also prevents the lender from trying to bully you. Your lawyer can renegotiate the terms and help you set up a new payment structure so that you can keep your car in bankruptcy.
Consider if you want lenders not to really want to repossess cars, they are not in the automotive business, they are in the lending business, they just want to be paid, according to the original agreement. When they realize that’s not going to happen, they’ll weigh their options and consider what’s best for them. Perhaps a reduced interest rate, reduced balance, or renegotiated terms are better for the lender than a repurchased used car with a low resale market value due to wear and tear and depreciation. Be honest, lenders don’t want to lose more money than they absolutely have to.
Another important point to remember; The “automatic bankruptcy deferral” is only temporary, and if you haven’t made timely payments, you can expect the lender to demand the return of the car or repossess it upon completion of your case. Also keep in mind that the suspension is only good during bankruptcy proceedings, which lasts about 3 months for Chapter 7.
What is the best way to prevent the repossession of cars during bankruptcy court proceedings?
- Make the payments
- Make up for missed payment
- Develop a repayment plan, ask the court to approve it
- Stay in touch with the lender through your lawyer
- Ask for help, maybe you pay interest only on a few payments
- Renegotiate the car loan
- Ask the court if you can buy your car back at fair market value (redemption of your car under Chapter 7 of the Bankruptcy Act).
- Ask your bankruptcy attorney about “cramdown” strategies in Chapter 13 bankruptcy
What can you do if your car is taken back into possession before the date of filing for bankruptcy?
Ask your bankruptcy attorney to help you create a repayment plan so the lender can receive the missed payments. If this has happened to you and your car has already been repossessed, do not hesitate. Call your insolvency lawyer now! That’s probably the best advice of all.
Summarizing!
You need to know your rights and understand your lender’s motivations. You need a good, solid bankruptcy attorney to work for you, one who has dealt with the local lenders here in Ventura and LA County. A lawyer who understands and has decades of experience. With the right strategy, you can keep your car, prevent humiliation and prevent the loss of your means of transport. After all, we live in California and you need a car.
refinancing my car
#insolvency #prevent #car #repossessed
Wendy is now a financial analyst and writer. Wendy has been writing about finance and personal finance since she was a sophomore in high school. She has also been writing for several online publications and published in The Huffington Post, and Forbes Woman.
Wendy is a credentialed financial analyst and has experience working with financial institutions and businesses. Wendy is also a certified financial planner. When Wendy's not writing, she enjoys tending to her many plants, watching TV, and spending time with her family.
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