Falling behind on bill payments and debts is a stressful situation for anyone to deal with. It is particularly frustrating and difficult for those who have had to finance important purchases. These items that you finance are vulnerable to repossession if you fail to make all payments in a timely manner.
Vehicles, furniture and even electronic items that you need for work may cost more than you can afford to pay all at once. When you decide to finance them, your continued possession of the items is contingent on your timely payments of the loan. If you fall behind, even by a month or two, the company in question could attempt to repossess the items that you rely on for daily life.
Especially for working adults and parents, the repossession of vehicles is particularly concerning. The good news is that Chapter 13 bankruptcy protection can help prevent the repossession of a vehicle if you have fallen behind on your payments.
How does Chapter 13 bankruptcy help with vehicle repossession?
Unlike Chapter 7 bankruptcy, which has protections only available to those below the median income level for the state, Chapter 13 bankruptcy can help even those with significant assets or higher than average income.
Chapter 13 is also called debt restructuring, because the courts help you negotiate new structures for your debt, which often involve lower interest rates and lower payments. Instead of attempting to juggle multiple payments, you will send one payment to the court each month, which will then allocate the appropriate amounts to individual creditors.
Chapter 13 bankruptcy may be an ideal solution for preventing repossession of the vehicle, as it can help you catch up on missed payments. Your lender will likely be eager to work with you and the bankruptcy court to avoid losing money on the loan. This can help you find more reasonable payments and ensure that repossession will not occur if you continue to comply with the repayments schedule.
The automatic stay can help you avoid immediate repossession threats
One of the biggest benefits of filing for bankruptcy protection is the fact that it comes with an immediate automatic stay. That stay prevents creditors from attempting to collect on debt until your bankruptcy goes through the courts. The automatic stay can help prevent issues such as a potential creditor lawsuit, foreclosure on your home or repossession of a vehicle.
If you believe your lender may soon attempt to repossess your vehicle, it is better to seek bankruptcy protections than to wait and see. However, if your vehicle was just repossessed, it may be possible to get it back from the lender if you file bankruptcy quickly.
Discussing your situation with an experienced Maryland bankruptcy attorney can help you decide what the best option is for your situation.