Although Chapter 7 bankruptcy laws automatically protect your car, this will not automatically save it from the clutches of the lender. This is because your car's lender can request the court to lift the stay and reposess the vehicle. The court is likely to grant the petition if the lender can prove that you are not making any attempts to cure your default. Here are three tips to help you maintain the stay on your car's repossession:
Redeem the Vehicle
If you have an outstanding loan on an asset, then bankruptcy laws allow you to redeem it for its fair market value. This involves making a court petition so that it can allow you to pay the lender and keep the asset. You can do this and keep your car, but you must pay the lender in a lump sum; no more installments will be allowed. One of the best things about asset redemption is that you pay the market value of the car, even if it less than what you owe the lender for it.
Reaffirm the Loan
If you can't afford a lump sum payment for the car, you can still keep it by reaffirming the loan. This means making a formal agreement with the lender to the effect that you will continue making the payments without delay. In essence, it allows the original loan agreement between you and the lender to continue as if you never applied for the bankruptcy.
For the bankruptcy court to allow your reaffirmation, you must prove that you need the car. You can do this, for example, by showing that it is integral to your means of livelihood. A good example is if there is no public transportation service linking your home and place of work. Also, you must show that you can make the repayments without going into extreme hardship.
Catch Up On Your Repayments
Lastly, you may also save your car by curing your load default. As explained in the introduction, a lender has no reason to go after your car if you are making timely payments. After all, he or she stands to make more money by honoring your original agreement than repossessing the car. Of course, this only makes sense if you have some cash to make the payments. This is usually only possible for those who are only a little behind on the payments.
The option you take depends on issues such as your financial situation and the strength of your arguments in court. For example, reaffirmation may not be advisable if your financial difficulties cannot allow you to continue making the payments.
For legal help, contact a law office like Sever Law Office.Share