A car is a useful asset. People depend on their automobiles to get to work, drop off and pick up their kids at school, run errands, and travel. If your car is repossessed, you can be left stranded and face a sizable fee to pay if you want to keep it. Filing for bankruptcy is one option to halt repossession. However, you might be unsure of when to submit if you are falling behind on your auto loans. The solution is based on a number of variables.
Bankruptcy filing is a significant choice. You shouldn’t treat it casually. Bankruptcy may not be your best option if you have no other debts and have only missed one auto payment. The majority of circumstances, though, are not so simple. You might go over your financial position and the potential advantages of declaring bankruptcy in detail by speaking with Law Offices of Terrence Fantauzzi. Call now at (909) 552-1238 to request a consultation.
Understanding California’s foreclosure process
The majority of consumers think their lender won’t do anything drastic if they miss one month of auto payments or are late with one. There is some validity to this notion given the prevalence of automobiles, loans, and missed payments. However, if you are even one day late with a payment, a lender has the legal power to seize your car without giving you any prior notice.
In contrast to the majority of other creditors, your lender is not compelled to notify you in advance of their intention to reclaim the vehicle if you fall behind on your auto payments. At any time, on any unprotected street, parking lot, or driveway, your automobile could be repossessed. Your presence is not necessary. Many folks go to bed only to wake up the next day to discover that their car has vanished.
Within 48 hours of the repossession, you will receive notice that your car has been taken. An inventory report of the personal goods found in the automobile as well as the contact information for your lender and the organization that repossessed your car will be included in the notice. You will also be told how much it will cost to get your hands on the car again, including storage fees and other associated costs.
Bankruptcy filing to prevent foreclosure
In the event that you fall behind on your car payments, declaring bankruptcy will stop the lender from seizing the car. It makes no difference if you are six months or one day behind. Your circumstances will determine whether you should file for bankruptcy and under what chapter. The following are some of the questions we will ask when helping you decide your next step:
- How far are you behind?
- Do you have the funds necessary to repay it?
- Do you still owe any other debts or bills?
- Would you like to keep the car?
The recommendations offered by our company would be influenced by the responses to each of these questions. For instance, the cost of filing for bankruptcy would likely exceed your automobile payment if you were only one month behind on your payments and had no other debts. However, declaring bankruptcy can be more advantageous if you are a month behind and are having trouble paying a sizable quantity of unsecured debt.
Additionally, if you determined you could no longer afford the car and did not want to keep it, filing a Chapter 7 case may allow you to relinquish the car and discharge the outstanding debt. If you could make the default payment within twenty or thirty days of filing, a Chapter 7 might also prevent you from being repossessed.
Bankruptcy under Chapter 13 and auto loans
Usually, a Chapter 13 is filed to reorganize a person’s debt. The most common reason for filing a case is that the debtor is overdue on their taxes or mortgage and needs to find a sustainable manner to pay off their creditors. It is also feasible to do this with a car loan, but the cost of a Chapter 13 case typically outweighs the advantage of getting an extra five years to make up for a few missed auto payments. There is yet another justification, though, for contemplating Chapter 13 bankruptcy.
Cars lose value more quickly than most other important assets. This sad circumstance makes it usual for an automobile loan’s outstanding debt to be higher than the car’s actual value. You might be eligible to reduce your payment to the car’s fair market value if you bought it 910 days before declaring bankruptcy.