Can Bankruptcy stop a repossession?
If you behind on your car payments, you may have received notices that you are at risk of your vehicle being repossessed.
Filing for bankruptcy will generate an automatic stay, which will stop creditors from repossessing the vehicle. A qualified bankruptcy professional can discuss with you your options to keep your car. These options include negotiating with the creditor to allow you to get car payments caught up, treating the vehicle in a Chapter 13 plan at a lower payment and interest rate or redeeming the vehicle at a reduced amount.
In a Chapter 7 Michigan bankruptcy, most car creditors will require a reaffirmation agreement. The reaffirmation agreement essentially puts you in the same position with the creditor as before you filed bankruptcy. However, some car creditors will be able to move past due payments to the back end of the contract allowing you to catch up to get current.
In a Chapter 13 bankruptcy, you will be able to enter into a new payment plan for your motor vehicle. Even if you are significantly past due on your obligation, your payments can be spread out over up to five years, often at a lower interest rate. Further, if you purchased your vehicle over 910 days before you filed, you can cram the vehicle down to its market value as opposed to paying the total amount owed.
Another option to stop your car from being repossessed is to redeem the vehicle. Redeeming the vehicle allows an individual to pay the vehicle off in total by paying a reduced amount reflected by the vehicle’s fair market value. We may be able to find you alternative financing to help you pay off the lump sum.
Can bankruptcy help even if my car has already been repossessed
At Detroit Lawyers, we understand that it is impossible to function without a motor vehicle. Do not risk your car being repossessed. If you are behind on your monthly payments, please contact our office immediately to schedule a free initial consultation at 248.327.7979.