Car Loans and Filing Bankruptcy
Filing for bankruptcy is extremely stressful, and the last questions you probably want to ask are: “what’s going to happen to my car?” “How am I going to get to work?” “How am I going to get groceries?” Although these are understandable concerns, knowing how to deal with your car loan during bankruptcy, will help alleviate some of your stress, and give you the best possible financial future.
Reaffirm your car loan
Most lenders will allow you to sign a legal agreement that states your promise to repay all, or some of the debt that might otherwise have been subject to discharge in your bankruptcy case. Because the use of a car is necessary for your transportation, bankruptcy law tends to make an allowances, in this regard. A good way of thinking about reaffirming your car loan, is as if there was never any bankruptcy filed against it. However, if you find that you are unable to make the loan payments, creditors can take you to court, and reposess your car.
Keep the car and continue making payments
Here, you include your car loan in the bankruptcy, and continue making your payments, as usual. It is necessary that you take responsibility in staying current with the payments – making sure to keep in contact with the lender to determine when the loan id fully paid-off. If you fall behind on your payments, the creditors can still take your car, but won’t be able to receive any sort of judgement amount, besides the money they’d get for auctioning the vehicle.
Surrender the car
If you really find yourself unable to make the payments on the vehicle, it might be better to find a cheaper car that you can buy with cash. Remember you don’t need luxury, just sufficient transportation. In this situation, you would include your car loan in the bankruptcy, and allow the lender to repossess and auction it. If the car is worth less than you owe, it might be the best choice you have.
Before making any decisions about your car payments in bankruptcy, make sure you discuss all of your options with a bankruptcy attorney. Don’t hesitate to contact the Adkins Firm by phone: 404-997-8942 or use our contact form. Our Atlanta bankruptcy attorneys are ready to serve you!