Financial difficulties may mean dealing with collectors. When your vehicle is on the verge of repossession, you may believe you have few options.
Chapter 13 bankruptcy is one way people in a financial crisis may find a way out. This particular type of personal bankruptcy may not only lead to financial independence but also allow you to keep your vehicle and residence. Find out how Chapter 13 works and decide if it is an option for you.
Stop collection activity
Should you choose to file Chapter 13, your creditors will receive notice. Under the court’s protection, all collection stops. This includes court actions, such as lawsuits. It also puts an end to the repossession of your vehicles. If the lender seized your car before filing, the court may order its return. You can include it as a part of your bankruptcy proceeding.
Chapter 13 does not seize assets to pay off debts. Instead, it allows a court-appointed trustee to negotiate more favorable repayment terms with lenders and creditors. The monthly payment uses your income to calculate what you can afford. Doing this sets you up for success and allows your creditors to recoup some of the money you have not paid. The payment plan lasts anywhere from three to five years. Once complete, the court may dismiss the remaining debts.
Your vehicle payment should roll into the repayment plan under Chapter 13 bankruptcy. This allows you to keep your means to work and helps you put yourself back on better financial footing.