For many people, the possession they value above all else is their car. Their cars allow them to get to work or to school, and a car provides a sense of freedom. Many Americans buy their vehicles by getting a loan. The loan is secured by a car or motorcycle or other vehicle. If your car or other vehicle is under threat of being repossessed, filing for Chapter 13 bankruptcy may be a good solution for you. To explore your options, you should seek advice from a knowledgeable bankruptcy attorney John M. Kenney, who may help you prevent vehicle repossession in Bucks County.Filing for Chapter 13 Bankruptcy in Pennsylvania
Whether you file for Chapter 7 or Chapter 13 bankruptcy, an automatic stay will go into effect, stopping your car lender from collecting payments. However, this stay may be temporary in a Chapter 7 proceeding, unless your vehicle is fully protected by exemptions. If your car has been repossessed already, but shortly before you filed for bankruptcy, you may be able to get it back as long as you can continue to make monthly payments, and your repayment plan includes a provision to cure the arrearage, the amount of your overdue payments.
You can stop repossession by filing for Chapter 13 and creating a debt repayment plan that provides for reasonable repayment of your car loan, as long as you actually stay up to date with payments. You will need to make reasonable payments called “adequate protection” during the period between filing for bankruptcy and approval of your repayment plan, even though collection activities are stayed. Most people do not have a lot of nonexempt equity on their cars, but if you do, your plan payments may be higher.
Chapter 13 reorganizes your debts into priority, secured, and unsecured debts. A car loan is a secured debt. The car is collateral for the loan, and the lender may repossess it if you fail to make payments. Priority claims, such as child support and alimony, are paid off first in Chapter 13 bankruptcy, but usually you will also have to pay lender’s secured claims using your disposable income. This is what is left after you deduct necessary living costs from your total income.
Another advantage of Chapter 13 is that you can use a bankruptcy procedure called a “cramdown” to reduce the amount you owe. This applies when you have an upside down car loan, which means that your loan is more than the value of the car, and you bought the car over 910 days ago. You can propose a cramdown that gives the lender the value of the vehicle instead of the total loan balance. For example, you might owe $10,000 on your car, but your car is only worth $4,000. You can ask that $4,000 be secured debt instead of $10,000. The remaining $6,000 will be unsecured debt, like your medical debt or your credit card debt. You will still have to repay a percentage of the unsecured debt, but you probably won’t have to pay the full amount. When you complete your Chapter 13 debt repayment plan, your debts will be discharged and you will own your car.Retain a Levittown Chapter 13 Bankruptcy Attorney to Protect Your Car
Preventing vehicle repossession in Levittown is crucial to many people contemplating bankruptcy. If you file for Chapter 13 bankruptcy, you are likely to be able to protect your car from being repossessed. Contact experienced Bucks County bankruptcy lawyer John M. Kenney to find out whether you can stop vehicle repossession and use other Chapter 13 tools. You can reach him by phone at (215) 547-3031, or by submitting an online inquiry. We serve clients in Bristol, Morrisville, Fairless Hills, Yardley, and Langhorne.