Can Filing Chapter 13 Help You Keep Your Vehicle?
Chapter 13 bankruptcy is a repayment plan that helps reorganize debt obligations. Payments are made based on a schedule that's approved by the court. While the chapter is commonly known for helping debtors keep their home and prevent foreclosure, it can also help you keep your vehicle by preventing repossession and lowering payments.
If you're like many individuals it's likely you depend on your vehicle for transportation. Even if you are late making payments, Chapter 13 may help in reducing what you owe on your car. The process can prevent your vehicle from repossession giving you an opportunity to get your finances in order and back on track.
Your auto loan may qualify for a reduction which helps you obtain a lower payment. Usually, the amount that is due on the vehicle is reduced to the current market value of the car. You may qualify for an interest rate reduction if the value of the car is less than the value of the outstanding loan.
There are certain requirements that should be met in order for vehicle payments to be reduced. When the payment plan is created, you'll want to be sure to make your payments accordingly. Since the payment plan is part of Chapter 13, you'll make payments to your trustee instead of the car company. Keep in mind, if your co-signer is not part of the bankruptcy, they could be liable for the outstanding balance of the loan. If you're seeking the best solution for your financial situation, talk to an attorney to learn if Chapter 13 bankruptcy is right for you.