How Bankruptcy Affects Car Loans

People with car loans have several options when considering Chapter 7 or Chapter 13 bankruptcy.

2012-04-21

April 21, 2012 (Press-News.org) How Bankruptcy Affects Car Loans

Many people considering bankruptcy have questions about how the process will affect their vehicle loans. Unlike credit card debt, medical bills and other forms of unsecured debt, which are often dischargeable in bankruptcy, car loans are usually secured debts. This means that the vehicle itself is used as collateral in the loan agreement, allowing the lender to repossess the vehicle in lieu of payment if the buyer fails to pay off the debt.

Secured loans are generally more difficult to discharge through bankruptcy than unsecured debt. Fortunately, there are a number of options for dealing with a vehicle loan during a Chapter 7 or Chapter 13 personal bankruptcy.

Chapter 7 Bankruptcy

With Chapter 7 bankruptcy, a borrower has some of his or her debts forgiven outright and may be required to surrender certain non-exempt assets. People with car loans who want to keep their vehicles when filing for Chapter 7 bankruptcy can either reaffirm the loan or redeem the vehicle.

Reaffirming a car loan during Chapter 7 bankruptcy involves signing an agreement to continue making payments on the vehicle after bankruptcy. If the borrower fails to make payments, the lender can repossess the vehicle.

To redeem a vehicle, the borrower makes a lump-sum payment to pay off the loan in the amount of its fair market retail value. Depending on the loan balance, redemption may or may not be feasible, but it can be an attractive option for those whose car loans are nearly paid off.

Chapter 13 Bankruptcy

With Chapter 13 bankruptcy, a borrower's debts are restructured and a payment plan is created. The borrow makes payments according to the plan for a period of three to five years, and the remaining unsecured debt is discharged at the end of the plan.

An auto loan will be included in the payment plan, but the exact amount depends on how recently the vehicle was purchased. Borrowers who took out a car loan within 910 days (2 1/2 years) before filing for Chapter 13 bankruptcy will be required to repay the entire remaining balance on the loan. On the other hand, for car loans more than 910 days old, the repayment amount is based on the current fair market value on the car.

People considering bankruptcy due to unmanageable debt should consult with an experienced bankruptcy lawyer to discuss their options.

Article provided by Law Offices of Phillip F. Drinkwater III
Visit us at http://www.pfdlaw.com

ELSE PRESS RELEASES FROM THIS DATE:

Florida Rolls Out Significant Personal Injury Protection Changes

2012-04-21

Florida Rolls Out Significant Personal Injury Protection Changes Big changes to Florida's personal injury protection, or PIP, insurance system are coming soon. Several legislators say the state, medical providers and consumers have all suffered from too much fraud in recent years and that the new law will return PIP to its original purpose of providing benefits for emergency treatment after auto accidents. The new law is intended to lower insurance rates and ease the burden of PIP litigation on Florida courts. Auto Insurance Premiums According to The News-Press, ...

Mediation -- It's up to You

2012-04-21

Mediation -- It's up to You Using mediation in divorce and family law disputes can result in settlements that stand the test of time. Studies show that mediated agreements result in the least number of reappearances in court. In divorce mediation, the divorcing couple uses a neutral third party to negotiate between themselves on issues such as property division, child custody and alimony. Mediation is not for everyone, however. Some situations demand zealous representation by a Massachusetts divorce lawyer because of the emotionally charged nature of divorce cases. ...

Uncovering Hidden Assets in Divorce

2012-04-21

Uncovering Hidden Assets in Divorce While no one likes to think they could be defrauded by their spouse, even under the worst circumstances, asset concealment during divorce is relatively common. Some spouses hide assets for purely financial reasons, perhaps fearing that they will not have enough to get by on after the divorce; others engage in asset concealment for other reasons, such as feelings of entitlement or a desire to seek revenge. Divorcing spouses hide assets from one another in a wide variety of ways, ranging from highly sophisticated to deceptively simple. ...

Texas Department of Transportation Encourages Drivers to Share the Road

2012-04-21

Texas Department of Transportation Encourages Drivers to Share the Road Hundreds of motorcyclists are killed every year in Texas, and that number is tragically rising. Because motorcyclists have very little protection other than a helmet (if even wearing one) motorcycle riders have a disproportionally higher fatality rate than drivers of other motor vehicles. A motorcycle rider is 25 times more likely to die in an accident than other vehicle drivers, according to the National Highway Traffic Safety Administration. NHSTA data shows that nearly 90 percent of motorcycle ...

Tired Truckers May Create Big Problems for Others on the Road

2012-04-21

Tired Truckers May Create Big Problems for Others on the Road According to the Centers for Disease Control and Prevention, adults should get between seven and nine hours of sleep every night. While being drowsy during the workday is an issue for many people, sleep fatigue among commercial truck drivers can result in deadly consequences. A recent study conducted by the National Sleep Foundation measured the sleep health of transportation workers like truckers, pilots and train engineers and compared their results to employees outside of the transportation industry. ...

Saving Gas vs. Driving Safely

2012-04-21

Saving Gas vs. Driving Safely During the choke of the nation's first major oil crisis, the National Maximum Speed Law provision of the 1974 Emergency Highway Energy Conservation Act was drafted. More than four decades later, many states have taken advantage of the federal government's deregulation of national highway speed limit standards and abandoned the 55 mph limits on most interstate roads; however, recent studies reveal that 55 may again be the magic speed to save energy as the nation continues to face energy supply and conservation challenges. According to ...

Some Cities Step in Where New Texas Traffic Laws Fall Short

2012-04-21

Some Cities Step in Where New Texas Traffic Laws Fall Short Updates to Texas traffic laws in September 2011 brought a number of changes for drivers in the state, including speed limit adjustments and a new law requiring drivers to slow down or move over when approaching a tow truck on the side of the road. Significantly absent from the overhaul, however, was a measure that would have banned texting while driving for all drivers in Texas. A proposed state-wide texting ban had been approved by state legislators in both the Senate and the House of Representatives, but ...

Teen-Driver Car Accident Fatalities Increase Nationally

2012-04-21

Teen-Driver Car Accident Fatalities Increase Nationally Motor vehicle accidents are the leading cause of death for 16- to 19-year olds, and statistics show that they are on the rise nationally. According to the Governors Highway Safety Association, the most recent preliminary data available -- for the first half of 2011 -- shows that the number of both 16- and 17-year-olds killed in car accidents is increasing. New Jersey Fatal Car Accidents In New Jersey, the trend is the opposite, but that does not necessarily mean the state is a model of superior highway safety. ...

New Jersey's Drug Courts Offer Road to Rehabilitation

2012-04-21

New Jersey's Drug Courts Offer Road to Rehabilitation New Jersey's drug court system recognizes the fact that people who struggle with drug abuse should not be imprisoned but should be treated like folks with any other disease. Fortunately, Gov. Chris Christie favors the drug court system in the state and plans to expand the number of participants by making participation in the program mandatory, not voluntary. In New Jersey, the drug court is essentially a treatment program led by the drug court judge who coordinates the steps of the program with court staff, probation ...

SSA Process Quickly Helps Individuals With Serious Medical Conditions

2012-04-21

SSA Process Quickly Helps Individuals With Serious Medical Conditions The Social Security Administration has been providing benefits and compensation for disabled individuals since 1935. According to the U.S. Census Bureau, about 12 percent of the American population -- over 36 million people -- are classified as disabled, but only about 8.5 million disabled wage-earners are collecting Social Security Disability Insurance benefits. Why is there such a disparity? The claims process for obtaining SSDI benefits can be time-consuming and confusing, especially for those ...

LAST 30 PRESS RELEASES:

New study shows biochar’s electrical properties can influence rice field methane emissions

Guangdong faces largest chikungunya outbreak on record

Tirzepatide improves blood sugar control in children aged 10-17 years with type 2 diabetes inadequately controlled on existing therapies (SURPASS-PEDS trial)