Will bankruptcy cost you a financed car?

On Behalf of | Jan 19, 2023 | Bankruptcy

Many people find their cars essential to allow them to earn a living. This is especially true for those who live in rural areas that lack a good public transport system.

When they lack the funds to buy a vehicle outright, their only option is to get one on finance. Yet unexpected expenses in other areas or the loss of a job could make keeping up with payments impossible.

It can reach the point where the lender moves to repossess the vehicle.

Ignoring the issue won’t make it go away, and seeing the vehicle repossessed could make your financial situation worse. So what can you do?

Filing for bankruptcy may help you keep your vehicle

Bankruptcy is designed to help you, not punish you. Courts understand that, often, it pays to let people keep their cars where possible. They want to see you escape your situation and move on to a more positive one, so cutting out your means of transport to work would not make sense.

Once you file for bankruptcy, anyone you owe money to, such as the car finance company, needs to stop contacting you, at least for the moment.

This gives you a chance to explain to the court and the lender why they should let you keep the vehicle. If you can show you need it and that clearing your other debts will mean you can pay some or all of the outstanding money you owe for the vehicle, they may agree to you retaining it.

There’s a lot to understand before filing for bankruptcy. Seek legal help to find out more.