avoid car repossession by filing for bankruptcy in arizona
Your car payment is probably one of the biggest expenses you have each month. You will likely prioritize the payment, even if you are having financial troubles, because you need your car to get to work and other important places, and because you know that missing payments can negatively impact your credit. However, when things get bad financially, you may struggle to make the payment, despite your best efforts.
If you fall behind on your payments, you are at risk of having your car repossessed. Talking to a bankruptcy attorney about filing for bankruptcy may lead to some solutions, but it depends on how far behind you are, what your goals are, and what your financial circumstances are like.
WHEN DOES THE Car REPOSSESsING PROCESS START?
Your lender won’t immediately send someone out to repossess your vehicle after you miss your first payment. Instead, you’ll get some reminder calls or letters, asking you to make your payment. You can also expect to be assessed a late fee.
Typically, a lender won’t start the process for repossessing your vehicle until you have missed two or three payments. Lenders are more likely to be forgiving if you have not missed a payment in the past or if you have been proactive in letting them know that you are having trouble. You will get plenty of notice that the repossession will take place, as well as plenty of warning about any other consequences of failure to pay, including late fees.
Financial Hardship Programs
Your lender may have a financial hardship program available if you have been missing payments. The program may allow you to defer payments for a specific period of time, or it may allow you to make a lower payment. The options vary depending on your financial circumstances and on what the lender will allow.
In most cases, the lender would prefer giving you some leeway to allow you to catch up rather than going through the expense of repossession and re-selling the car.
Filing for Bankruptcy
Filing for bankruptcy may be able to help you get the debt relief you need if you are facing repossession or other big financial consequences, like foreclosure or a lawsuit. Filing for bankruptcy will not discharge the debt you owe for the vehicle. Auto loans are secured loans, which means they are backed by the value of the vehicle. However, filing for Chapter 7 bankruptcy can discharged unsecured debts like credit card bills, which could free up the money you need to pay what you owe on your vehicle and save it from repossession.
Alternatively, you may file for Chapter 13 bankruptcy and put all your debt under a restructured repayment plan that you can actually afford. Your Chapter 13 debt reorganization plan can include what you owe on your vehicle, which can allow you to catch up on your late payments. At the end of your repayment plan, which is typically three to five years, you may be able to strip down anything you still owe, such as if you owe more on your vehicle than what it is currently worth. That scenario is not as likely with a car as it is with a house since auto loans are for a shorter period and vehicles generally don’t retain their value as well. However, it is a possibility and one worth exploring with a Gilbert bankruptcy attorney.
hire a professional bankruptcy lawyer in gilbert, AZ
If you are struggling to pay your car payments, chances are that you are having trouble paying your other bills also. Talk to a bankruptcy attorney about how filing for bankruptcy may be able to get you the debt relief that you need. Gilbert Bankruptcy Lawyers are ready to help. We represent clients seeking protection through both Chapter 7 bankruptcy and Chapter 13 bankruptcy. Our experienced attorneys will review your financial details and get a better understanding of your goals, such as whether you want to keep your home or keep your car from being repossessed, and will then recommend a course of action for you. We can help you put an end to harassing phone calls and take back control of your finances. Call us in Gilbert today to schedule a consultation with a bankruptcy attorney and learn more.