If you’ve fallen behind on your car payments, you may have received notices or even threats of repossession from the lender. You may live in constant fear that your car will be gone when you come out of your house or leave work. There’s a way to eliminate the stress and anxiety that come with fears of losing your car—with a personal bankruptcy filing.
The Protection of the Automatic Stay
When you file for bankruptcy, whether it’s liquidation under Chapter 7 or reorganization under Chapter 13, you are immediate shielded by the provisions of the “automatic stay.” The automatic stay prohibits your creditors from calling, writing, contacting you or taking any legal action (outside of the bankruptcy proceeding) to collect the debt from you. Because the stay is automatic, it goes into effect without any requirement of action from you. Once you’ve filed your petition, you are protected.
Chapter 7 or Chapter 13?
Should you try to discharge the debt on your car through a Chapter 7 proceeding or renegotiate what you owe through a Chapter 13? As a practical matter, you can always restructure the debt in Chapter 13 and you may be able to get fees and penalties waived and even get the lender to reduce your monthly payments. It’s a bit more complicated to try to discharge the debt on a motor vehicle through Chapter 7. Typically, you can’t discharge the debt on a secured asset and keep the asset. There is, however, an exemption for personal motor vehicles, but it’s a relatively small amount. Accordingly, the only way you can typically discharge the full amount of debt on a car is if the amount owed is less than the amount allowed by the exemption.
Contact Heath, TX Bankruptcy Attorney Carrie Weir
I provide a free initial consultation to anyone with questions or concerns regarding a bankruptcy filing. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.
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