Can Chapter 13 Bankruptcy Help with Overdue Car Payments?

man reads bankruptcy chapter 13 law in the officeMany people experience financial hardships from time to time, and one solution is bankruptcy. There are two common types of bankruptcy for individuals. They are Chapter 7 and Chapter 13. Anyone considering Chapter 13 bankruptcy should reach out to an experienced and established law firm specializing in Chapter 13 bankruptcy in Alabama.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is also referred to as the wage earner’s plan. Rather than continue with presently established payment plans, it allows the debtors to develop a more suitable payment plan based on their current situation.

The individual filing for Chapter 13 creates a reasonable payment plan lasting three to five years. In cases where the person is earning less than the set median wage for the state, they receive three years plan with the option to extend it if approved after the time expires. The maximum allotted time for Chapter 13 is five years, so an extension would give the individual two more years.

There are many advantages to filing Chapter 13. This process helps prevent foreclosures and repossession and allows the individual to satisfy their obligations over time in a more achievable manner. When a person is allowed to file Chapter 13, it effectively halts all attempts to collect debts during that time.

Does Chapter 13 Bankruptcy Help with Overdue Car Payments?

If you’re currently overdue on your car payments, Chapter 13 can help. This process allows you to keep your car, restructure your payments, or create a Chapter 13 car loan modification. However, you must agree to catch up on your missed payments on your car during the bankruptcy filing.

Additionally, filing Chapter 13 may allow you to reduce your total owed on the vehicle by structuring a plan to pay the car’s current value, known as the “Cram Down” option. However, there is a time limit from the date you purchase your vehicle to the time you apply for this option. By filing for Chapter 13 bankruptcy in Alabama, you get the following features.

  • Three to five years to catch up on payments
  • Potentially lower loan amount
  • Keep your vehicle
  • Have a cram down or surrender option

The decision to file Chapter 13 is highly beneficial if you want to catch up on past-due payments, keep your car, and have more affordable payment plans. Be sure to call a Mobile, AL bankruptcy attorney to get started as soon as possible.

How Late can a Car Payment Be?

You need to file for bankruptcy before three payments are late. This is usually when a finance company attempts to repossess your car.

What if I Miss a Car Payment During Chapter 13?

If you miss a payment for your vehicle, you may have your case dismissed. There isn’t a grace period for making payments, so it’s crucial to stick to the payment schedule and not miss any payments.

How a Bankruptcy Attorney Can Help in Filing Chapter 13

A bankruptcy attorney can negotiate the conditions of your Chapter 13 bankruptcy filing and assist with any additional features of the payment plan for your vehicle. They advise their clients on the best course of action to get the best individual results and reduce the financial pressures they face. They can also help collect documentation, speak with representatives of the companies you owe money and communicate with the courts.

Call The Loris Bankruptcy Law Firm Today

If you need a bankruptcy attorney in Mobile, AL, you can count on the Loris Bankruptcy Law Firm to help you start filing for Chapter 13. Call us today to receive a consultation for services and learn about your options.