By Robert J. Semrad | Published April 02 2020 |
How Bankruptcy Can Stop Creditors from Repossessing Your Car
One of the biggest myths about bankruptcy is that it will require you to give up your personal possessions. To the contrary, bankruptcy can often help you hold onto your most significant assets. Take your car, for instance.
Next to a home, a car is the most expensive purchase most consumers will ever make. And if you’re buying a new (or newer) vehicle, it’s highly unlikely that you’ll be able to afford it without financing your purchase with a loan.
In such secured loans, buyers agree their car will serve as collateral if they default on monthly payments. If car owners do fall behind on their lease or loan payments, repossession laws in Illinois and many other states allow creditors to take possession of the vehicle.
Having your car repossessed is not only humiliating; it’s also a serious financial blow. Losing your vehicle limits your freedom and mobility. It also means the loss of all that hard-earned money you paid when you were able to afford your monthly installments.
Fortunately, falling behind on car payments doesn’t have to mean losing your wheels. The right bankruptcy plan can protect your car and help you get your finances back on track so you won’t miss future payments.
Filing for Chapter 13 bankruptcy is the most effective way to ensure your car stays where it belongs – in your garage. When you file for Chapter 13, a legal action called the automatic stay immediately halts any efforts by creditors to seize your truck, car or any other possessions. If you can afford to make monthly payments under a restructured plan developed by you and your bankruptcy attorney, Chapter 13 may be your best bet for keeping your car.
If your income – and therefore your ability to make payments, even lowered ones – is limited, you may still be able to keep your car under a Chapter 7 bankruptcy plan. While Chapter 7 liquidates some assets to pay off debts, it is sometimes possible to tailor your plan to protect one large purchase by working out a way to reaffirm your car loan or redeem its current value.
There’s more than one strategy for keeping your car. The only strategy guaranteed to not work? Doing nothing.
You shouldn’t have to sit back and let creditors take away your car – or any assets, for that matter. DebtStoppers bankruptcy plans have helped countless people stop repossession and get back on their financial feet.
If creditors are knocking on your door, the right bankruptcy plan can keep them out. Contact DebtStoppers today to learn more with a free personal debt analysis courtesy of our bankruptcy lawyers.