Is a Car Loan Forgiven with Bankruptcy?
When you file for bankruptcy, most debts are eradicated, including money owed on an auto loan. If you can show that repossession would cause significant financial hardship, the court may allow reduced payments over a period of time. So, even if you can’t make payments, you may still be able to keep your car.
There are different types of bankruptcy, and the Brooklyn bankruptcy attorneys at Ursulova Law Offices can help you determine the best course of action. Read on to learn more about Chapter 7 and Chapter 13 bankruptcy, and how to find a bankruptcy lawyer in Brooklyn.
UNDER CHAPTER 7:
Chapter 7 bankruptcy is also known as liquidation bankruptcy. Under Chapter 7 the court allows you to liquidate or sell your property to pay creditors. This is permitted by the court if it is in your best financial interest to do so. You may be able to keep your car if you file for chapter 7 bankruptcy.
This is the most common option for individuals facing economic hardship. This option allows you to declare bankruptcy and get rid of most debts, including your car loan. A Brooklyn Chapter 7 bankruptcy lawyer can help you best navigate filing Chapter 7 bankruptcy.
UNDER CHAPTER 13:
Chapter 13 bankruptcy is for those who can prove that if they had to keep paying all their creditors, they would not have been able to follow through with a payment plan. If you file for chapter 13 bankruptcy, the court will allow you to keep most of your property, including your car, but it will order the lender to continue making the minimum monthly payments on the loan. The court will also allow you to keep making additional payments to cover any other expenses that will prevent you from completing your plan. This type of relief is often called a “court-approved repayment plan.”
If you file for Chapter 13 bankruptcy, the court will hold a hearing to determine whether your auto loan should be forgiven. At the hearing, if you can show that repossession would create a hardship for you, the court will most likely allow you to keep your car. Chapter 13 bankruptcy is also known as a “reorganization” bankruptcy since it helps you reorganize your finances so that you can repay your debts in a more manageable way than previously filing for Chapter 13.
It is often used by those who have large debts or owe a lot of money to a certain creditor. Under Chapter 13, a bankruptcy court will allow you to keep your car, but it involves filing a plan with the court and making regular payments over a period of three to five years. The court may require reduced payments on your other debts, and also possibly for you to continue making payments on your car loan. If you live in New York, a Chapter 13 lawyer in Brooklyn is best served to help.
HOW YOUR ATTORNEY CAN HELP:
A Brooklyn personal bankruptcy attorney is the best person to help you with your decision to declare Chapter 7 or Chapter 13 bankruptcy. Ursulova Law Offices will review your finances and provide advice about how bankruptcy will affect your credit rating and your ability to buy a home or car, among other things. Your bankruptcy attorney Brooklyn based will review your financial situation and help you figure out whether you should file for bankruptcy, and whether you should keep your car or sell it. He or she will also help you avoid foreclosure and find a lower mortgage rate.