Keep Your Car, Lose the Staggering Payments

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infrastructure and roadway injury

infrastructure and roadway injuryYes, it’s true. Even when going bankrupt, you may not have to get rid of your car (or even real estate investment)! Instead, if you are able to file a Chapter 13 “wage earners” bankruptcy, then you could be able to reduce your principal balance and restructure your vehicle installment loans, or you may be able to at least minimize the payments.

Cramdown Provision

Going without your car can actually put you in a worse position, so why not look into getting the “cramdown provision?” This would allow you to lower the total balance of the loan down to its secured value and basically drop the excess interest. Also, your interest rate could be lowered, and you may be able to lessen your required monthly payments down to lower payments than they would have to be outside of a Chapter 13 bankruptcy.

Getting this accomplished can get quite confusing, but if you have a qualified bankruptcy lawyer on your side, your chances for this option go up significantly. Also, there are some restrictions, so it would be worth your while to reach out for a legal consultation.  

How Do I Qualify for a Loan Cramdown? :

  • The start date of your auto loan must be more than 910 days prior to filing (that’s about 2 ½ years); there is a similar rule for real estate, but it just requires the loan to 1 year old
  • Your bankruptcy must be filed as a Chapter 13
  • Usually, the court will require the loan to be paid off within the 3-5 years of your Chapter 13.

Cramming down your loans can be a saving grace. So, before you go canceling any payment contracts and planning your bus route to work and back, and before you go looking for someone that can pick your kids up here and there, take some time to really consider this option. Reach out and find a great bankruptcy lawyer in your area by clicking here.