As a local attorney, we help families to get out from under debt by taking them through the bankruptcy process. Very often, this is triggered by a repossession action. Cars are integral to our daily life and activities. The ability to drive to and from work, take the kids to school, go buy groceries, etc. is part of daily life, and most people cannot imagine going without that option. Unfortunately, for those facing financial difficulty, making the car payment may no longer be an option. Some banks or lenders will work with you while many are notorious for harassment and moving to repossession quickly. You will know which one you are dealing with based on their tone during phone calls and if they send you a letter with threats. If you feel that a lender is escalating the situation and you need to keep your car, you may want to file for bankruptcy.
Most people that have difficulty making their car payment have other debts as well such as credit cards and personal loans. Given how easy it is to access credit, when financial hardship strikes the natural inclination is to use a credit card and maintain life as usual. This works when the financial situation improves in relatively short order. However, for millions of Americans the economy got bad and things never fully got better – leaving many households with a mountain of debt. Over time, it can be difficult to continue meeting obligations once they have reached an overwhelming level. The car getting repossessed may just be the tipping point, and we recommend seeking help before you get there.
When you meet with our attorney office to discuss filing bankruptcy, we will review both the secured and unsecured debts that you have. Typically, unsecured debts are fairly easy to deal with in a bankruptcy filing because there are no assets that can be repossessed by not making the payments. Secured debts, like an auto loan, can be far more complicated. Filing bankruptcy will stop the collection action so at a bare minimum the harassing phone calls will stop, and you can continue to live in your home and drive your car while going through the process. What happens next, depends on several factors.
For one, what type of bankruptcy do you want to file? As an attorney, we can help you to file a Chapter 7 bankruptcy that wipes out all of your debts or a Chapter 13 where a repayment plan is arranged with the creditors and approved by the court. In a Chapter 7, any secured debts that you have either need to be given back or you need to continue making the payment. In a Chapter 13, you will make one payment that is disbursed amongst your creditors (minus your mortgage) after being approved by a judge. This payment will be ongoing each month for a period of years and then any remaining debt balances will be wiped out. We can discuss your options in further detail, including how to save your car, during a consultation.
