Preventing Repossession During a New Jersey Bankruptcy
Having your car taken from you can be a terrible experience, and can make it extremely difficult to carry out your everyday life activities. If you filed for bankruptcy, you have certain protections and rights afforded to you that can help prevent your car from being repossessed. A skilled bankruptcy attorney can help you by preventing repossession during a New Jersey bankruptcy.
Protecting your Vehicle in Bankruptcy
When you file for bankruptcy, you get instant protection by the bankruptcy court through what is referred to as the “automatic stay.” The automatic stay is an order established the moment you file for bankruptcy that prevents creditors from continuing collections attempts against you. The automatic stay extends to car lenders by preventing them from taking your car while the automatic stay is in effect. A car lender can request that the automatic stay be lifted to try and take efforts to repossess your car.
However, the automatic stay may buy you enough time to figure out your next step regarding your vehicle. There are options available for preventing repossession during a New Jersey bankruptcy that can be considered in either a chapter 7 bankruptcy or chapter 13 bankruptcy.
Stopping Repossession Through Chapter 7 Bankruptcy
After you filed for a chapter 7 bankruptcy, you have some options for keeping your vehicle. One option is to reaffirm the debt associated with your vehicle. Reaffirming a debt involves signing an agreement that allows you to keep your vehicle, but also makes you personally liable for the debt. This agreement is typically referred to as a “reaffirmation agreement.” Another option is to redeem the vehicle. Redeeming a vehicle essentially means you buy back the car at its fair market value. This may be a great option for you if your car is worth much less than the amount owed on the car loan.
Stopping Repossession Through Chapter 13 Bankruptcy
A chapter 13 bankruptcy can prevent the repossession of your vehicle. When you file a chapter 13 bankruptcy, a repayment plan of your debts is typically established. As part of this repayment plan, you can include any car payments that were missed. If you remain current on your repayment plan during your chapter 13 bankruptcy, then your car lender cannot repossess your vehicle during or at the conclusion of your bankruptcy.
A chapter 13 bankruptcy can also help you by changing the terms of your automobile loan through what is referred to as a cramdown. A cramdown can reduce the principal balance and interest rate of your car loan if the value of your car is worth considerably less than the amount owed on the car loan. The cramdown can help decrease the chances of repossession by reducing the amount of money you are paying on a car loan.
How a New Jersey Bankruptcy Attorney Can Help You
Spending endless nights worrying about how to keep your car after you file bankruptcy can be stressful. However, this anxiety can be avoided when you know there are ways to avoid a repossession. If you are behind on car payments and you filed bankruptcy, you can take steps to keep your vehicle. A qualified bankruptcy attorney can advise you of options in terms of preventing repossession during a New Jersey bankruptcy.