If I'm filing for bankruptcy, can I keep my car and have the payments reduced to where I can afford to pay off the auto loan? - Bankruptcy Law Questions and Answers- LawQA.com

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If I'm filing for bankruptcy, can I keep my car and have the payments reduced to where I can afford to pay off the auto loan?

David R. Fondren, Attorney at Law
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There are not enough facts in your question to answer this. Are you filing a 7 or 13? what is the auto worth? how much do you owe? Why do you think they will reduce payments? You really need professional help with a bankruptcy. This is not an area designed for self help or DIY.

Answer Applies to: Missouri
Replied: 2/5/2015

Answer By Dorothy G Bunce
A Fresh Start
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Filing Chapter 7 bankruptcy will not change the terms of your vehicle loan unless you qualify for a redemption of your vehicle for its fair market value. You will need to find a lender to pull this off and the legal fees to do this are significant. Filing Chapter 13 will let you extend the repayment terms of your vehicle loan, but is only appropriate if the amounts involved are substantial, since the Chapter 13 program is very expensive.

Answer Applies to: Nevada
Replied: 2/3/2015

GARCIA & GONZALES, P.C.
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It is called a 722 Redemption. Speak to an experienced BK attorney on how this works.

Answer Applies to: Colorado
Replied: 2/3/2015


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In a chapter 13 you can, but not a chapter 7.

Answer Applies to: Nevada
Replied: 2/2/2015

Answer By Ryan Beach
The Law Offices of Ryan F. Beach, PLLC
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You may be able to file a Chapter 13 plan which would allow you to retain the car and lower the monthly payment obligation by reducing the interest rate and the amount that is paid back as a secured claim (secured claim is paid in full, while the unsecured portion is paid back 0-100% depending several factors). Your ability to modify the auto loan will depend on several factors, such as the principal balance owed, the value of the car and when the car was purchased. You should consult with an experienced bankruptcy attorney to see what is possible for you. You may also be able to file a Chapter 7 and make the car loan more affordable by doing what's known as a redemption. By redeeming a vehicle, you are paying the market value of the car and discharging the difference between that market value and the principal balance owed. Most people who have gone through a Chapter 7 do not have the funds needed to pay the market value; however, there are companies that specialize in loans for redemption. Of course, you will want to look into what is available to you for redemption lending if you think Chapter 7 is the route for you. You do not want to file Chapter 7 only to find out later than you are not eligible for a redemption loan or there is some other prohibitive factor to what financing is available to you.

Answer Applies to: Michigan
Replied: 2/2/2015

Answer By Janet Lawson
Janet A. Lawson Bankruptcy Attorney
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You can not alter a car payment in chapter 7. It can be done in ch13 if you purchased it more than 910 days ago. If you paid it off and then got a title loan, you can modify the payment in ch13 right away.

Answer Applies to: California
Replied: 2/2/2015

Answer By Derek Freeman
Freeman Law Group, LLC
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Maybe. If you file a chapter 7 bankruptcy, you will be able to keep your car as long as the equity you own in the vehicle is less than or equal to the exemption amount in your state. You will need to state your intent to keep the car, and continue to make payments. You may be able to sign a reaffirmation agreement with reduced payments, if your lender is willing to offer it. I wouldn't count on it though. If you want to reduce payments, you can file a chapter 13, which would allow you to create a payment plan. All of your disposable income gets paid into the plan every month. You won't be paying less, but it might be more manageable in the end. You need to speak with an attorney to find out what's best for you in your situation.

Answer Applies to: Colorado
Replied: 2/2/2015

Answer By Michael Johnson
Law Office of Michael Johnson
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You may be able to do this in a chapter 13. You should consult with an attorney to see if it will be helpful.

Answer Applies to: Florida
Replied: 1/31/2015

Answer By Darren Aronow
The Law Office of Darren Aronow, PC
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If you are filing a chapter 7, you should ask your attorney if you qualify for a "cramdown" of your vehicle and it is possible to reduce your payment. You can also try to negotiate a lower interest rate in exchange for executing a reaffirmation agreement.

Answer Applies to: New York
Replied: 1/31/2015


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If doing a Ch 13 you can force the vehicle loan company to take the prevailing rate which is probably 6%. In a Ch 7 as long as payments are current on the vehicle the company will agree to a reaffirmation of the debt and perhaps they will allow a lower interest rate but they don't have to do that. They will probably insist that the terms of the loan remain the same.

Answer Applies to: Minnesota
Replied: 1/30/2015

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