If you are having difficulty making your vehicle payments and are in danger of losing your vehicle, you may want to consider filing for bankruptcy in Alabaster, or wherever you reside, as a way to catch up on your payments while keeping your vehicle. Chapter 13 bankruptcy is one type of bankruptcy that may allow you to catch up on your automobile payments while keeping your car. Here’s everything you need to know about Chapter 13 bankruptcy and how it can help you keep your vehicle.
Chapter 13 bankruptcy, also known as a “wage earner’s plan,” is a type of bankruptcy available to individuals with regular income who owe debts that are primarily consumer debts. Chapter 13 allows the debtor to keep their property, including their car, and pay off their debts over a period of three to five years through a repayment plan.
If you file for Chapter 13 bankruptcy in Birmingham, you will be required to submit a repayment plan to the bankruptcy court. The repayment plan must outline how you will pay off your debts, including your car loan, over a period of three to five years.
Your monthly payment for debt will vary depending on your income, outgoings, and the kind of debt you have. Your monthly payments will often be determined by your disposable income, which is the amount of money you have left over after covering your essential living costs. The bankruptcy court will assess and approve your repayment plan; it must be practical, which means you must have adequate income to make the installments stipulated in the plan. You will start making regular payments to a bankruptcy trustee after your repayment plan has been authorized, who will then give the money to your creditors. As long as you make the required payments and meet the terms of your repayment plan, you will be able to keep your car and other property.
One of the main benefits of Chapter 13 bankruptcy is that it allows you to catch up on missed car payments over the course of your repayment plan. This is known as “reinstating” the car loan. If you are behind on your car payments and are facing the threat of repossession, filing for Chapter 13 bankruptcy can provide immediate relief by halting the repossession process. This will give you time to catch up on your missed payments through your repayment plan.
However, keep in mind that you will still be responsible for paying off the entire car loan, including the missed payments, over the course of your repayment plan. This means that you will need to have a feasible plan in place to pay off your car loan in addition to your other debts.
It’s also worth noting that not all car loans are eligible for reinstatement in a Chapter 13 bankruptcy. Some types of car loans, such as high-interest loans or loans with a co-signer, may not be eligible for reinstatement. You should speak with a Prattville bankruptcy attorney to determine whether your car loan is eligible for reinstatement in a Chapter 13 bankruptcy.
If you are unable to make the required payments under your Chapter 13 repayment plan, you may be at risk of losing your car and other property. In this case, the bankruptcy court may convert your Chapter 13 bankruptcy to a Chapter 7 bankruptcy, which is a liquidation bankruptcy. In a Chapter 7 bankruptcy, your non-exempt assets, including your car, may be sold to pay off your debts.
It’s important to note that a Chapter 13 bankruptcy is a serious commitment and requires you to make regular payments over a period of three to five years. If you are unable to make these payments, you may lose your car and other property.
Before deciding to file for Chapter 13 bankruptcy, it’s critical to carefully consider your financial situation and whether you will be able to make the required payments. You should also speak with a Montgomery bankruptcy attorney to determine whether Chapter 13 bankruptcy is the right choice for you and to discuss your options for catching up on your car payments and keeping your vehicle.
In conclusion, Chapter 13 bankruptcy can provide a way for homeowners to catch up on their car payments and keep their vehicle, as long as they are able to make the required payments under their repayment plan. It’s important to carefully consider your financial situation and speak with a bankruptcy attorney in Clanton, or wherever you live, to determine whether Chapter 13 bankruptcy is the right choice for you.
Attorney Steven A. Harris regularly blogs in the areas of family law, bankruptcy, probate, and real estate closings on this website. Mr. Harris tries to provide informative information to the public in easily digestible formats. Hopefully you enjoyed this article and feel free to supply feedback. We appreciate our readers & love to hear from you!