Don't be concerned about your vehicle if you register for Chapter 7 bankruptcy. You can use your vehicle during bankruptcy by providing the bankruptcy court with a Statement of Intention (SOI) detailing your decision.
Why is it essential to make a rapid decision regarding your automobile?
The """"Automatic Stay"""" prevents the repossession of your assets when you apply for bankruptcy. However, the residency is not permanent. Your lender may petition the bankruptcy court to lift the stay and reclaim your vehicle. Therefore, it is essential that you maintain your vehicle before declaring bankruptcy.
You have two options if you want to retain your vehicle during Chapter 7 bankruptcy and avoid repossession:
1. You can elect for Redemption and pay the lender a lump sum. The sum will equal the car's current market value.
If you have sufficient funds to cover the car's current market value, you may choose redemption and purchase the vehicle regardless of the remaining loan balance. For instance, your total loan amount is $15,000 and the current market value of your vehicle is $10,000. In such a case, you will have to pay $10,000 for your automobile.
You are able to enter into a contract with your lender and continue making payments as if you had not filed for bankruptcy. It is known as Automobile Loan Reaffirmation.
Now, the majority of people who file for bankruptcy do not want to give up a substantial amount of money. Consequently, redemption is a less popular option. If you want to continue using your vehicle during bankruptcy, you can opt for auto loan reaffirmation and continue making lesser payments to the lender as opposed to a lump sum payment.
Why should you choose to reaffirm your auto loan?
Bankrupt individuals are ineligible for auto loan approval. Additionally, individuals with a history of recent bankruptcy find it extremely difficult to obtain a loan. Therefore, it is prudent to maintain your current auto loan program.
Even if you are approved, the interest rates on auto loans after bankruptcy are extremely high. Obtaining a loan with exorbitant interest rates is extremely hazardous because it increases the likelihood of falling behind on monthly payments. Therefore, it is preferable to opt for auto loan reaffirmation.
If you allow your vehicle to be repossessed, your lender will have to engage in a number of procedures to recover funds. He must sell the vehicle at auction and accept whatever proceeds he receives. Thus, it is in his best interest for you to continue making payments on time. You can take advantage of this circumstance and obtain lower loan rates.
Therefore, now that you are well-versed in auto-loan reaffirmation, you need not stress about your vehicle during bankruptcy.""
" - https://www.affordablecebu.com/
