For many consumers, a car is not just a prized possession - it is also a means of transportation needed to get to work or school, run daily errands, or conduct other essential travel. But, when automobile loans become burdensome and a vehicle owners fall behind on payments, creditors can snatch away this relied-upon necessity through repossession.
There are, however, legal remedies consumers can turn to in order to protect their cars. With the assistance of a skilled bankruptcy attorney, you may be able to file a Chapter 7 or Chapter 13 bankruptcy petition and stop creditors from getting their hands on your automobile
Automatic Stay Is Powerful Tool Against Creditors
There are several kinds of bankruptcy, each geared toward consumers, businesses or other entities in different financial situations. Chapter 7 and Chapter 13 bankruptcy are the two main types of bankruptcy for consumers.
A feature of both Chapter 7 and Chapter 13 bankruptcy is the automatic stay. As its name implies, the automatic stay is self-executing: all a consumer must do in order for an automatic stay to take effect is file a bankruptcy petition.
The automatic stay functions as a stop sign to creditors. It halts all collection actions, along with virtually all other creditor activity that may advance a creditor's interest at the expense of the consumer, with the full authority of the courts. If a creditor had plans to repossess your vehicle, the automatic stay stops them in their tracks.
Chapter 7 and Chapter 13 Distinctions
An automatic stay is only a temporary form of relief. It gives consumers the chance to breath, weigh their options, and structure a bankruptcy plan. To ultimately keep your vehicle, different strategies may be employed in Chapter 7 or Chapter 13 proceedings.
In Chapter 7 bankruptcy, exemptions may already protect your car from a forced sale, depending on its value and other factors. Another common solution in Chapter 7 for keeping your vehicle is reaffirming the vehicle loan debt and making payments under the new terms of the reaffirmation agreement.
Chapter 13 bankruptcy involves the consolidation and restructuring of most forms of debt. In your Chapter 13 case, interest charges and monthly loan payments can be slashed drastically. In some cases, the loan balance secured by your vehicle may even be reduced to its current market value.
Legal Help
If you are worried that your car may be in danger of repossession, do not wait until it is too late. Contact a bankruptcy attorney today to explore your legal options.
