I am behind on car payments but don’t want to lose my car, can bankruptcy stop repossession and let me catch up?

Yes to stopping repo and maybe to catching up.

Bankruptcy will stop the repossession in the short term, but catching up is another matter.

If you file a chapter 7, you can choose to reaffirm the car loan, but most lenders will require that you catch up on payments in the first 2 or 3 months of the bankruptcy before they let you reaffirm the debt.  If you can’t catch up, then they will eventually repossess the car.

If you file a chapter 13, you can propose a plan to keep the car, stretching payments over a 36-60 month plan.  A chapter 13 lets you control the payment term and drops the interest rate on the car loan to about 6%.  So, let’s say you owed $12,000 on your car and the payments were $400 a month with a 19.99% interest rate.  If you file a chapter 13, you can stretch the loan to a 60 month repayment at 6% interest, paying about $220 a month for the car.

So either way, you can stop the repossession, and it is possible to catch up.

This is not legal advice.  If you need help go to www.robertpaynelaw.com.


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