File bankruptcy before your lender takes your vehicle. But if you couldn’t, bankruptcy may still get back your just-repossessed vehicle. When Does a Lender Repossess a Vehicle? When CAN a vehicle lender repossess your vehicle? Just about all vehicle loan contracts let the lender repossess the minute you are late on a payment. There may be a legal grace … Read More
Reaffirmation of a secured debt, like a vehicle loan, can be a great way to keep the vehicle or other collateral. But know the risks. Last time we introduced reaffirmation agreements as a good way to keep collateral like a vehicle under Chapter 7. Essentially, you get to keep the vehicle or other collateral in return for agreeing to … Read More
Chapter 13 vehicle loan cramdown solves a number of serious practical problems that even Chapter 7 “straight bankruptcy” can’t.
If you’re buying a vehicle, sometimes getting out of the contract is your best option. Chapter 7 lets you do that, owing nothing.
In a Chapter 7 case you “reaffirm” your vehicle loan if you want to keep your vehicle. This means you keep paying it.
Getting out of a vehicle lease by “rejecting” it in Chapter 13 isn’t quite as quick as in Chapter 7 but has about the same practical effect.
Although Chapter 7 can work fine if you’re current on your lease, use Chapter 13 instead if you’re behind and need time to catch up.
You can most likely “assume” your vehicle lease and keep that vehicle under Chapter 7. But you need to be current or able to be quickly.
Chapter 13 gives you powerful ways to hold onto a vehicle, but it also lets you give up that vehicle without paying its debt.
A secured debt effectively turns into an unsecured debt if you surrender the collateral, which may make sense to do more than you think.
A vehicle lease can cost you less up-front and each month, but is in reality very expensive. Bankruptcy is your way to break the contract.
Want to keep your leased vehicle but aren’t current on the payments? File a Chapter 13 case if you can’t get current right away.
If current or able to get current on your vehicle lease payments, you’ll likely be able to keep that vehicle in a Chapter 7 case.
Keeping a vehicle and its debt is sometimes not the best option. Chapter 7 and Chapter 13 can both give you a safe way out.
A reaffirmation agreement is a document, usually prepared by your vehicle lender, which you sign and is then filed at the bankruptcy court.
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