Failing to make a car payment on time could result in an individual’s vehicle being repossessed. However, lenders in Virginia and throughout the country don’t want to see that happen. Usually, it is more expensive to repossess a car as opposed to working out a new payment plan. They will generally work with those who reach out to them in a timely manner. Car owners can also look to refinance their vehicles in an effort to create favorable payment terms.
For some, simply refinancing or modifying a car loan isn’t going to solve their problem. Instead, they will need to look into filing for Chapter 13 bankruptcy. Doing so could have a variety of benefits such as the ability to seek a cramdown. A cramdown results in a borrower owing only the fair market value of the car. Any portion of the loan that is more than this amount is converted to unsecured debt.
A debtor may also have the opportunity to turn a vehicle over to the lender. Alternately, vehicle owners can keep their cars if they make up the past due portion and continue to make payments as scheduled. Those who are facing repossession must be notified before it happens. Therefore, there is usually time to create a plan of action before a car is actually taken back by a lender.
Filing for Chapter 13 bankruptcy might be an effective way to deal with a vehicle loan or other forms of debt. Doing so may allow an individual to catch up on past due payments and have unsecured debts discharged at the end of the repayment period. During this time, debtors are generally allowed to keep property if they make payments on it. An attorney may help an individual file their bankruptcy petition.
