Owning a car may be very important to fulfill your daily tasks. Namely, you may need it to run errands for your household; chauffer your children to school; transport yourself to doctor’s appointments; commute to your workplace; and more. So not being able to have a car during and after your bankruptcy proceedings may make this already miserable situation even worse for you and your family. If this is a serious fear of yours, please follow along to find out how your bankruptcy filing may affect your car loan and how a proficient Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you retain and obtain one.
How is my current and future car loan affected by Chapter 7 bankruptcy?
For all intents and purposes, your car loan is considered a secured debt. Meaning, if you default on the loan, your lender may exercise their right to repossess your car as collateral.
With that being said, you may discharge your current car loan through your Chapter 7 bankruptcy proceedings. However, this may mean that your bankruptcy trustee could take possession of your car, sell it, and use these earned funds to pay your due lenders. This is unless you can successfully renegotiate a monthly payment plan with your car lender, among other valid tactics to keep your car during this time.
As for your future car loan, you may have great difficulties obtaining one in the years following your Chapter 7 bankruptcy case. This is because your bankruptcy history may knock up to 200 points off your credit score. What’s more, your past bankruptcy case may be disclosed on your credit report for up to 10 years afterward. So, with knowing this information, prospective lenders may be hesitant to approve you for a car loan. This is unless you can prove you are not a risk, by obtaining a creditworthy cosigner or putting up a substantial down payment, among other valid tactics.
How is my car loan affected by a Chapter 13 bankruptcy filing?
You may face similar challenges with obtaining a future car loan after your Chapter 13 bankruptcy filing. However, you may have a better chance of keeping your current car in your possession throughout your case proceedings.
This is because a Chapter 13 bankruptcy case has you keep all your property attached to your secured debts. This is so long as you comply with the mandatory, court-approved repayment plan. That is, through your required monthly payments, you may slowly but surely pay back any missed car loan payments. Then, once you catch up, you may stay current on your car loan payments until you successfully pay it off within three to five years. All the while, through this bankruptcy type, you may renegotiate an outstanding car loan debt to reflect the current market value of your car.
So if you want more clarity, please allow a talented Louisville, Kentucky consumer bankruptcy lawyer to offer it. Schedule an appointment with Schwartz Bankruptcy Law Center today.
