If you’re behind on your car payments, talk to your lender as soon as possible. You might be able to reach an agreement. When negotiations are unsuccessful, bankruptcy can provide temporary relief or a way for you to catch up on your payments. The options that are available depend on your financial situation and which type of bankruptcy protection you request. Chapter 13 bankruptcy is a better option if you want to keep your car by catching up on the payments.
When you file for Chapter 7 or Chapter 13 bankruptcy, an automatic stay goes into effect, but it doesn’t protect you completely. The lender can ask the court to lift the stay so that your car can be repossessed. However, you can challenge this request.
If you would like to keep your car or truck, your Chapter 13 repayment plan should include details about how you will make up for the missed payments. You must stay current on your payments after the plan has been approved by the bankruptcy court. It’s more difficult to keep a financed car during Chapter 7 proceedings. However, there are several options.
- If you can afford a lump-sum payment, you can purchase the car for its fair market value. This can help if you owe more than the car is worth.
- Chapter 7 bankruptcy can remove deficiencies if you still have a loan balance after the car has been sold.
- You can make up for the missed payment or purchase the car outright, but you may have to pay repossession costs and other fees.
If you depend on your car or truck for making a living or for driving to and from work, you can’t afford to lose it. I will do everything that I can to help you avoid repossession or to reclaim your vehicle if it has been repossessed but hasn’t been sold. Call Mitchell & Hammond at 405-216-0007 to schedule a free consultation with founding partner Gary Hammond.