Repossession of a motor vehicle can make anyone’s life more difficult. Not only is it a tremendous inconvenience as it takes an individual’s primary source of transportation, it can also have negative effects on a person’s credit. However, filing a bankruptcy after a repossession can alleviate these problems while potentially saving vehicle owners some money on their loan payments.
The repossession of a motor vehicle or other type of personal property does not end a borrower’s obligation to repay a vehicle loan. Once a motor vehicle, motorcycle, boat or motorhome is repossessed, it is auctioned and the proceeds of the sale are used to pay the balance of the vehicle loan.
In many, if not most, cases the balance of the loan exceeds the value of the vehicle. In this situation when the proceeds are insufficient and a balance or deficiency remains, the original party that purchased the vehicle remains liable and is obligated to satisfy any balance remaining on the loan.
As might be expected, an automobile, motorcycle, boat or motorhome repossession can reduce the credit score of any consumer. Repossession usually stays on an individual’s credit report for seven years after the date of the original loan delinquency.
A Chapter 13 bankruptcy case can provide a solution if a car is repossessed. A Chapter 13 case filing will stop the sale of the repossessed vehicle and may force the lender/obligee to immediately return the vehicle to the debtor. However, should the creditor refuse to return the vehicle, a return of the vehicle may require a court order, which is not guaranteed.
Another benefit of a Chapter 13 case filing is that debtors may qualify to cram down a vehicle loan if the purchase of the vehicle is beyond the 910 day period prior to the bankruptcy case filing. A “cramdown” may lower the total amount of future payments by modifying the original terms of the loan such as the loan balance, interest rate, and loan term.
If a Chapter 7 or Chapter 13 debtor chooses to not have his or her vehicle returned after the repossession and the car is then later sold at auction, any remaining deficiency will be included with the debtor’s unsecured debts. Only a portion, if any, of these debts, will most likely be paid in a Chapter 7 liquidation or Chapter 13 plan.
Lehman Franklin has helped those seriously affected by financial hardship in the Statesboro community for over 50 years. Along with a capable and dedicated support staff, attorneys H. Lehman Franklin and Kimberly Ward offer quality and zealous representation on behalf of all of their bankruptcy clients. Don’t hire just any bankruptcy lawyer to file your case. You need a lawyer like Lehman Franklin or Kim Ward who have 65 years of collective experience filing bankruptcy cases. If you’re in need of our services and would like a FREE consultation, give us a call, send us an email or simply check us out online.
Our office is located at 127 North Main Street in Statesboro, GA (30458). We proudly serve Bulloch County, as well as the surrounding counties of Chatham, Candler, Evans, Bryan, Effingham, Screven, and Jenkins. Contact our office by telephone at 912-764-9616, by email at email@example.com, or check us out online at hlfranklin.com. We’re available to meet your legal needs Monday through Friday from 8:30 AM until 5:30 PM.