For many adults, especially those with demanding careers or minor children, a motor vehicle is not a luxury. It is a necessity to meet the basic expectations placed on them on a day-to-day basis. They need a car to get to and from work or to take their children to school. Without their own transportation, it could be a major challenge for them to manage their household and provide for their loved ones.
Yet, even those with relatively well-compensated jobs may find that the rising cost of used and new vehicles makes them difficult to obtain. Many people finance vehicle purchases and then spend years paying an automotive loan. Missing only a few payments might put someone’s ownership interest and transportation at risk. Personal bankruptcy can help those worried about potentially losing their financed vehicles.
Bankruptcy can prevent repossession
Once a financial institution repossesses a vehicle, the person who financed the purchase will likely have an uphill battle to regain possession of the vehicle. The best option is usually to prevent the repossession of the vehicle. Intentionally hiding the vehicle from a lender is illegal and will likely prove fruitless due to improvements in technology.
Filing for bankruptcy, on the other hand, leads to an automatic stay that will prevent collection activity. Lenders will not be able to move forward with an attempt to repossess of financed vehicle until the courts either resolve the bankruptcy filing or grant them a special exemption if they request a hearing in front of a judge.
Bankruptcy can help someone catch up on the loan
Lenders incur a lot of costs when they have to pay to repossess a vehicle, which means that they might cooperate with individual borrowers who need adjustments to the terms of their loans in order to continue making payments. Lenders might agree to increase how long someone makes payments, a move that could allow them to get back on track without making multiple missed payments at one time.
Increasing the repayment period could also potentially decrease monthly payment amounts, making it easier for someone to remain in good standing on their vehicle loan. If nothing else, a bankruptcy discharge that eliminates certain unsecured debts would likely make it easier for someone to make their vehicle loan payment on time every month.
Understanding how bankruptcy can help those concerned about vehicle repossession may lead to a better overall outcome for those who have fallen behind on their payments.