Personal vehicles: Luxury or necessity?

Filing for bankruptcy is a stressful process, and the most stressful part of it is deciding how to handle your personal properties and any debts you might still have. One of those possessions is most definitely your vehicle, as you may not be able to pay off the debt on your car, and life without it can become exceedingly difficult. Nowadays, having a car is not just a status symbol, it is an absolute necessity. If you live in the suburbs, life without a car is fairly challenging. Trivial things like driving your children to school, commuting to work and going shopping can prove impossible without your personal vehicle. When you weigh the payments for the car and life without it, the first one definitely seems like a lesser evil. Luckily, filing for bankruptcy does not necessarily mean that you have to give up your vehicle. It is possible to keep it even if you file for bankruptcy and this largely depends on the type of bankruptcy you are filing for. Consult an experienced San Diego bankruptcy attorney for professional advice.

If you are filing for a chapter 13 bankruptcy

In case of a Chapter 13 bankruptcy borrowers are given the option of restructuring their debts into a payment plan. What this means is that your loans will be repaid, although they might be restructured depending on the age of the vehicle. If the vehicle loan is older than 910 days, courts may consider reducing the debt depending on the vehicle’s current market value. So if you have a loan on an older car, it might just be lowered. If you have a newer vehicle, you will have to pay the full value, although possibly at a lower interest rate.

If you are filing for a chapter 7 bankruptcy

If you file for a Chapter 7 bankruptcy, you have a few options ahead: to reaffirm your debt, redeem the car or to surrender the vehicle. Should you choose to reaffirm the debt, you will continue paying the vehicle off in order to keep it. You will have to sign an agreement to pay for it despite filing for bankruptcy. However, there is a reasonable risk that you may not be able to pay it off and find yourself back at the beginning.

The second option is to redeem the vehicle, in which case you need to pay off the rest of the debt in order to redeem your car. However, due to your increasingly difficult financial situation, this option might prove to be the most difficult one.

The third and final option is to surrender the vehicle. If you decide that you do not want to or cannot pay off the vehicle debt, you can return it to the vendor. If you rely on the vehicle heavily, this option may sound horrible, but it might just be the best option if you realize that you cannot pay off the remaining debt. In this case you might just be able to buy a new, less expensive vehicle if you save up the money you would have used to pay your previous one off.

Are you looking for a professional San Diego bankruptcy attorney?

If you are filing for bankruptcy in San Diego area, contact Bankruptcy Lawyers Chang & Diamond for a legal consultation. We are passionate about helping our clients obtain debt relief and will come up with the best way to help you pay off your debt and reclaim your home or vehicle. Whether you are facing a Chapter 7 or Chapter 13 bankruptcy, contact our agents for a free consultation through the form on our website or by calling (619) 312-4900 or (800) 718-8118 toll free.