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It’s one of the most frequently asked questions about debt and bankruptcy: if you file bankruptcy, will you lose your car?
The answer, according to bankruptcy attorney David Shuster, is no. He specifies that every situation is different, but in most cases, Chapter 13 bankruptcy allows one car for each licensed driver in the household. In this interview, he provides even more solutions for people who are struggling to stay on top of their car loan payments.
David Shuster is a debt relief attorney with Shuster Law, PLLC in the Dallas—Fort Worth area. In this video, he explains what you can do if you’re upside down on your auto loan.
Contact David directly by calling 888-365-0921 or by submitting a contact form on this page.
This is one of the most common questions that lawyers get from people in debt considering bankruptcy. The answer is yes, you can keep your car. Under bankruptcy rules, you are allowed one car for every licensed driver in the household. So this could mean that if you live alone and have two cars, one of them may be seized. If you file for Chapter 7, chances are you would not be able to keep an extra recreational vehicle. However, each situation is different.
Yes. It is okay if you are behind on your car loan payments. The goal is to eventually be caught up on paying your auto loan. If you want to keep the car, you have to keep making payments. Due to the lien on the car, it can be repossessed if you fail to make payments.
This applies if you have owned the car for 910 days prior to the date of filing Chapter 13 bankruptcy. Essentially, you can put the value of the car in a repayment plan rather than the loan the balance.
Let’s say you owe $20,000 in payments. However, the value of the car is much less. If the car would sell for $15,000, you can restructure your payments so that you’re only paying back $15,000 instead of $20,000. This tool forces the creditor to refinance the car for reasonable terms.
Yes. The cramdown is intended to help people in this exact situation. It is also a benefit of Chapter 13. By using the cramdown, the person in debt gets a path to owning the car much quicker and cheaper. When you’re done paying for it, then the car-related debt goes away.
You need to have insurance. You need to be making payments to the best of your ability. You might have trouble cramming down a super luxurious type of car. Overall, there are very few limitations when it comes to who can cram down their auto loan.
This is a very common cause of debt and bankruptcy. Insane interest rates and trade-in policies leave people struggling to make ends meet. Thankfully, the Chapter 13 auto loan cramdown offers a helpful solution to those who cannot stay on top of their loan payments. It allows them to own the car for what it’s worth as opposed to paying it off on the horrible terms imposed by the car loans.
The best way to find out about your options for rising above debt is to contact a bankruptcy attorney. During the consultation, they can assess your situation and explain the best options available to you.
Contact attorney David Shuster directly by calling 888-365-0921 or by submitting a contact form on this page.
Disclaimer: This video is for informational purposes only. In some states, this video may be deemed Attorney Advertising. The choice of lawyer is an important decision that should not be based solely on advertisements.
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