How Chapter 13 Works
A Chapter 13 is designed to restructure and reorganize all of your debts into one affordable monthly payment. The payment is affordable because it is based off the amount of disposable income you have. Disposable income is the income you have left over after subtracting the amount of your total take home income from the amount of your reasonable living expenses. Secured debts like you vehicle are paid back in the plan and unsecured debts that you cannot afford to pay back are discharged out.
Chapter 13 allows you to pay back the note under possibly more friendly terms. First, a Chapter 13 plan can go up to five years. If you owe last than five years on your vehicle, this allows you more time to pay it back which means less of a monthly payment. Second, if you have a high interest rate on the loan, Chapter 13 allows you to repay the loan at a lower, more fair interest rate. Finally, if you have been buying your vehicle for more than 2.5 years, Chapter 13 may allow you to pay back only the current value of the vehicle as a secured debt instead of the amount owed.
Chapter 13 is a fair way to pay back your creditors because creditors all get paid through an organized plan (based on what you can afford) instead of each creditor calling and trying to harass you into paying their debt in full. It is fair to you because you only pay what you can actually afford.
What about getting my car back after it has been repossessed?
If your car has already been repossessed you need to act quickly. When a creditor repossesses your vehicle, if that creditor want to collect a deficiency against you after selling it, they send you a letter stating you have a certain number of days to redeem the vehicle by paying off what is owed on it. If they are not trying to collect a deficiency, they can sell the vehicle without any notice to you. Your vehicle is usually sold at an auction. Once sold, it is too late to get it back.
However, you can avoid all of this by filing for Chapter 13 bankruptcy. Once the bankruptcy case has been filed, your vehicle cannot be sold at auction. The creditor is required by law to immediately return the vehicle back to you. Therefore, the process of getting your vehicle back is very quick and can be usually be done within a day or so.
Stop the Repossession Process
Do you have other questions about how to stop repossession, or how bankruptcy protections can work for you? The Harris Law Firm offers free consultation so you can make an informed decision. We do not charge a fee unless you decided to file. Contact us or call us at 501-372-6985 or set an appointment online.
If you have fallen behind on your automobile payment or if you have had your automobile repossessed, it is not too late to keep it. A Chapter 13 bankruptcy allows you to reorganize the back payments on your vehicle and pay it back usually under more friendly terms than the original note. The Harris Law Firm can help you get started immediately to stop repossession processes. Contact us today—call 501-372-6985, or set an appointment online.