Monroe County, New York Repossession Defense Law Firm Protects the Rights of Clients

Rochester Bankruptcy Attorney Interprets the Law Concerning Car Repossession

Lenders make car loans based on their desire to collect monthly payments as opposed to repossessing the vehicle. If you are having trouble making your payments, the lender may be willing to work with you. If you can, send at least a partial payment to show your good faith and to reduce the chances of the situation escalating further.

Try to call your lender and speak to them directly to discuss your situation. Document every conversation, along with the name and title of each person you talk to, and send any letters via certified mail, so that you have proof of your efforts.

Bankruptcy, Repossession, Redemption, and Chapter 13

Filing for bankruptcy will stop car repossession, potentially buying you valuable time to try and negotiate a payment arrangement. If your delinquency is recent and you have a good history with your lender, your bankruptcy attorney may be able to negotiate a loan modification, particularly if you want to reaffirm the debt and keep the vehicle. Reaffirmation involves signing an agreement with your lender, many times under the same terms as your original contract.

When you file Chapter 7 Bankruptcy, you have the right to pay the creditor the actual value of the vehicle in full as opposed to the loan balance. This is particularly beneficial if you “rolled over” the balance due on a prior loan when you purchased your current vehicle. This is known as redemption. When you redeem the vehicle the current lender must be paid in a lump sum. If your car has less than 100,000 miles and is seven years old or newer, you may be able to obtain a new car loan with the help of your bankruptcy attorney in order to redeem the vehicle. The new loan will be only for the value of your vehicle, not for the original contract balance, and the difference will be wiped out through the bankruptcy.

When you file Chapter 13 Bankruptcy, the car loan balance will be paid through your plan. The interest rate will be set by the Court, and the rate is often less than the contract rate. If you obtained the car loan more than 910 days before filing Chapter 13, you are eligible to “cram down” the loan. This means that the creditor is paid the actual value of the car as a secured claim with interest through your Chapter 13 Plan. The loan balance exceeding the car value is treated as an unsecured debt and receives the same percentage as the other unsecured creditors without interest.

Contact a Rochester Repossession Defense Law Firm Today

If your car is in danger of being repossessed, Monroe County bankruptcy attorney Robert A. Schwartz might be able to help you keep your property. Contact our firm online or call [custom:phone] to schedule your free initial consultation today.