If you have a financed vehicle, there is likely a link between your job and your car. You probably needed to prove your income in order to secure the necessary financing for the vehicle in the first place, and you likely need to keep the vehicle in order to commute to your job.
Unfortunately, after you fall behind on a loan secured by a vehicle, it’s possible for the finance company involved to take enforcement action against you, which could include repossession of the vehicle that you depend on for all your transportation needs. Bankruptcy can be a tool to help you stop the repossession of a vehicle.
An automatic stay can halt a pending repossession
As soon as you file your petition for bankruptcy with the courts, you receive an automatic stay that will stop creditors from continuing collection efforts against you. That can mean halting legal proceedings and delaying an attempted repossession. However, it’s important to understand that the lender can likely go to court, present proof of the debt and ask the court to allow them to resume collection efforts by waiving the automatic stay for this specific debt.
Bankruptcy can offer a potential solution
If you have thought about filing for Chapter 13 bankruptcy, you may be able to negotiate your car loan with your lender as part of those proceedings. Provided that you reach a solution that works for both you and the lender, you may be able to reduce your monthly payments, reduce your interest rate or at least retain the vehicle.
If you file for Chapter 7 bankruptcy, you may be able to redeem the vehicle for its actual value, which could mean saving thousands of dollars when compared with the balance on your vehicle loan. An experienced bankruptcy attorney can provide valuable guidance as you decide the best solution for your circumstances.