Aside from maybe a foreclosure notice or a garnishment, there are few things that disturb a Louisville resident’s financial peace more than getting a notice that their car is about to get repossessed. Worse, some families may wake up one morning to discover that the vehicle they counted on is gone, legally seized by a repossession company working on behalf of a bank or financing company.
A Chapter 13 bankruptcy can be a valuable tool for slowing down or even stopping this scary situation. Moreover, it can also protect the family’s vehicle so that they can in turn be used to generate income and keep their household financially afloat and running relatively smoothly.
As previous posts here have discussed, when a family files a Chapter 13 bankruptcy they automatically get the benefit of a legal stay, which is a court order requiring creditors not to take any further collection actions until the bankruptcy ends or until the creditor gets the court’s permission to proceed with collection. On a practical level, this means that a car repossession cannot go forward and, generally speaking, the creditor has to return the car if it has not been sold.
Moreover, a Chapter 13 bankruptcy allows families to pay off their car debt, including any overdue payments, over time via what is hopefully an affordable monthly repayment plan that has been approved by the bankruptcy court.
In some cases, a debtor may have the option to pay what his or her car is actually worth in lieu of the balance on the loan. Lots of times, the value of the car is worth less than what the debtor owes, which means this approach can save a Kentucky family a lot of money, sometimes to the tune of thousands of dollars.