Laws About Auto Loan In Chapter 7 Bankruptcy Filing
A car is essential to live in America. However, many people face a situation in their lives when they are unable to pay their car loans. This could mean that their car would be repossessed. Life can come to a stand still if that happens. Also, several people are stuck with cars for which they are paying thousands of dollars through car loans, even though these cars have much less market value. |
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Does filing for Chapter 7 allow you to escape paying more? Filing for Chapter 7 to save your car or home should always be used as a last option. By filing for Chapter 7, you are declaring bankruptcy. It will take two to three years for you to repair your credit score and become eligible for loans again.
As per the laws pertaining to Chapter 7 for auto loans, a person who has filed for Chapter 7 can declare their vehicle as an asset and the loan as a liability. In case he/she has paid up the market value of the car and only the additional interest amount is remaining, then it can be waived off. For example, if a person has a car that is worth $25,000 and the loan amount is $38,000 and if he or she has already paid $25,000, then the remaining $13,000 is waived off by the court.
Creditors cannot call for recovering the amount or they cannot ask for reinstatement of loan. The vehicle cannot be seized either, and the debtor retains the car.
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