Does Bankruptcy Include Car Loans

Does Bankruptcy Include Car Loans?

If you’re wondering, does bankruptcy include car loans, the answer is yes it does. When filing bankruptcy, you actually get a choice when it comes to car loans. This article addresses a few scenarios regarding car loans in bankruptcy, and we hope it’s helpful. If you have further questions or would like to take next steps to file, call us at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out shortly.

Repossessed Vehicle Car Loans

If you have an old car debt still lingering on your credit report, a Chapter 7 or a Chapter 13 bankruptcy will address the debt. You will not have to pay the face value on the debt and there’s nothing the creditor can do to keep you from discharging the debt. As long as the property (the car) has been returned to the lender, or totaled out by your insurance company due to an accident, the bankruptcy filing will address the old car debt.

Can I Keep The Car I’m Driving?

If you currently have a car with a loan, you can choose to keep the car and the loan, when you file bankruptcy. Nothing will change between you and your vehicle lender. The general rule is if you want to keep the car, you have to keep the debt. However, you can also surrender your car to the lender and force them to take the debt with it. Bankruptcy puts you in a powerful position in this regard.

What If I’m Behind On Car Payments?

If you’re behind on car payments you’ll need to file a Chapter 13 to allow you to catch up on the payments. This is a great solution which allows you to keep the car, and forces the lender to give you some time to catch up. You can file a Chapter 7 if you’re behind but by the time your 341 meeting comes, you’ll need to be current on payments. You can also choose to Redeem Your Vehicle in a Chapter 7.

What Happens When I Surrender A Vehicle In Bankruptcy?

If you choose to surrender the vehicle in bankruptcy, you simply need to make arrangement with the lender to deliver the car to them, or allow them to pick up the car at a location you designate. This can be your house, work, or some other location. You will most likely be able to drive the vehicle a few weeks after the bankruptcy filing, but arrangements will need to be made to physically deliver the car to the lender quickly.

What If I Need A New Car?

Most clients in need of a new car, purchase one right before filing bankruptcy. Then, when the bankruptcy is filed, the client indicates they want to keep the new car and the new car loan. They also indicate they want to surrender the old car and the old car loan. It’s tougher to get a loan right after filing bankruptcy, which is why this order of things tends to work. Again, the new car lender relationship is not complicated by the bankruptcy filing. You’ll continue to make payments on the new car through the bankruptcy and after.

Speak With A Charlotte Bankruptcy Lawyer Today

Does bankruptcy include car loans? YES. If you have questions about whether bankruptcy includes car loans, please feel free to call us at 704.749.7747 or click for a FREE CASE EVALUATION. We know you have choices. We hope you choose to Recover With Us.