Financing a vehicle can be easier than financing other purchases because the vehicle serves as collateral for the loan. Even if you don’t have much of a down payment, lenders may be willing to work with you because they know they can always take the vehicle back if you stop making payments.
Unfortunately, if you lose your job or suffer some kind of medical event, you could miss a few months of payments on your vehicle. If you lose the vehicle, it can be hard to get back on your feet financially.
How could you possibly manage your household and get to work if you have no way to get anywhere? If you have already missed multiple payments, the lender involved may not care about the impact of a vehicle repossession on your life or ability to make payments. Is there anything you can do to stop that repossession?
Filing for bankruptcy can give you time to negotiate
When you file for bankruptcy, the court will immediately issue an automatic stay until they either grant your discharge or dismiss your case. The automatic stay prevents collection activities unless creditors go to court and ask for approval to continue. The automatic stay won’t permanently stop repossession efforts, but it can give you a few weeks to catch up on payments or possibly reach an agreement with the lender involved.
If you file for Chapter 13 bankruptcy, the restructuring process for your debts will serve as an incentive for your lender to work with you. Even in Chapter 7 proceedings, it may be possible for you to work out an agreement with the company that issued the car loan so that you can keep the vehicle if you reaffirm what you owe on it.
Those facing the repossession of their vehicle or other aggressive collection tactics may need help exploring how to legally protect themselves. An experienced attorney can help.