Before making definitive decisions, it is recommended that you consult with your legal team.
First, here is what occurs in a chapter 13 bankruptcy. When you file for chapter 13 bankruptcy, you, your attorney, and the estate trustee will restructure your debts to make them more manageable.
The attorney and trustee will work with your creditors to reduce interest rates and may deduct late fees and charges if they are able to do so. Then, a new monthly quantity will be determined to help you become debt-free. This is an instance of repayment bankruptcy. Depending on your unique circumstances, you will pay this new monthly amount for three to five years, or until the debt is completely eliminated.
If you have a car loan payment, you can restructure the loan and any arrears into the repayment plan under chapter 13. Here, you could park your vehicle. Be aware that your car payments will most likely be higher than they were previously; this is to help you catch up on your delinquent balance. Additionally, you are liable for the total loan amount. If the value of your vehicle is $4,000 and you still owe $6,000, you must pay the entire balance.
If your vehicle was repossessed shortly before you filed for bankruptcy, you may be able to retrieve it by including the outstanding balance in your repayment plan.
The last available option is known as a pack down. Here, the court has the opportunity to reduce your loan amount by the car's Kelly Blue Book value. The difference between your original loan and the value of your vehicle becomes comparable to other unsecured debts, and you may not be required to pay it; it will be discharged through bankruptcy.
In addition, the courts can reduce your interest rates to approximately 2 percentage points above the prime rate. This would obviously reduce your monthly payment, making it more manageable.
To qualify for the cram down, the vehicle must have been purchased at least two and a half years prior to the bankruptcy filing. In addition, the vehicle must be paid off by the end of the repayment plan. Consequently, if the repayment period under chapter 13 is three years, the vehicle must be completely paid off by the end of that period; this may necessitate a large sum payment at the conclusion of the bankruptcy term.
Always consult with your counsel regarding the best course of action for your unique situation.""
" - https://www.affordablecebu.com/
