Tag: Car

What About My Car in Bankruptcy?

Bankruptcy can be used to get rid of bad car deals, or help you to pay for a vehicle you want to keep.  You can buy a car on credit after filing bankruptcy, so you may want to dump a gas guzzler or high payment vehicle and get a cheaper one.

Below is Chapter 18 about your vehicle. Read this chapter and more https://www.bankruptcybookbypeterfrancisgeraci.com/

Bankruptcy can be used to get rid of bad car deals, or help you to pay for a vehicle you want to keep.  You can buy a car on credit after filing bankruptcy, so you may want to dump a gas guzzler or high payment vehicle and get a cheaper one.

If you are like most people, your car is financed.  The U.S. Department of Commerce estimates that, in 1991, the average cost of owning a car that is financed is over $425.00 per month.  The cost of owning a car includes the monthly payment, the interest lost on the down payment or cash value of the trade-in, repairs and maintenance, depreciation (the amount the car goes down in value every month), license and taxes, as well as gasoline and oil.  I have seen more than a few people who are paying more for their car than for their rent.  If they were living in their cars, that would be a good idea!

Many people are suffering from “car fever” when they buy a car.  Dealers have relationships with finance companies that allow them to finance any kind of deal.  If you want to finance a car with a bank or a finance company that has no relationship with the dealer, the first thing a loan officer will do is look up the car in a book which lists the value of the car.  There are several services which provide such information.  Most finance companies or banks that have no continuing relationship with a car dealer will only loan you 70 to 80% of the average retail price for the same type of car listed in the book.  If you are paying more than the average retail price, you will be able to get a loan based on the average price similar cars are usually sold for, not on 75% of what you want to pay.

What does this mean to the average car buyer?  It means that if you are paying too much more than the usual price everyone else pays for similar cars, the “average retail price”, you will have to put more money down.  However, finance companies that have regular relationships or agreements with car dealers will lend you almost any amount, regardless of how much the car is really worth.  In other words, they will finance you for the price the dealer got you to pay, not what the car is really worth.

When that happens, often the car is worth less than you owe on it.  If the difference between what you owe, and what you could sell the car for, is very great, you may want to give the car back to the finance company.  Then, you won’t owe anything, and you can start fresh and get another car.

Can you get another car, if you have filed a bankruptcy?  This depends on you. If you are filing a bankruptcy, your credit is probably bad anyway right now.  After you discharge your debts, you won’t have any payments to make, so you probably will be able to afford reasonable car payments.  If you put some money down, many dealers will finance you again.  Or, you can buy a used car for cash. Or, for what you would spend on a car, you can take cabs.  The trick is to avoid getting into trouble on another car. 

If your car payments are reasonable, and you owe less than the car is worth, or about the same, and you are up to date in your payments, and the car is running good, you will probably want to keep your car even though you are getting rid of the rest of your bills.  This is absolutely no problem.  The finance company will be happy to agree, generally, that your debt will survive the bankruptcy.  This is done in writing, and is called a reaffirmation.

If you are behind in your payments, or don’t have car insurance, finance companies will seldom let you keep the car unless you cure those problems.  This is true even when you are not doing a bankruptcy.

Many people come in to do a bankruptcy after the finance company has repossessed the car because they didn’t make the payments, or didn’t keep it insured.  Sometimes I can get the car returned if they bring the payments up to date, and get insurance, but most of the time they are better off giving up the car.

In a situation where the car has already been repossessed, if you owe less than the car is worth, it might be worthwhile investigating filing a Chapter 13 debt repayment plan.  This is a repayment bankruptcy, and the payments can be restructured if your budget allows it.  Of course, Chapter 13 plans, in which you pay a payment to a court-appointed trustee who sends it to your creditors, are always more expensive than Chapter 7 bankruptcies.

If you have a car that you own, and it is not financed, you need to have me look at the exemptions allowed by law, to see if you could still file a bankruptcy and keep the car, free and clear of any claims of creditors.  In Illinois, if the car is your main asset, and you own it free and clear, and you are the only one on the title, we need to see if you can keep it without having to do a Chapter 13. This may not be a problem, however.  I do many Chapter 7 bankruptcies, especially for married people who own vehicles in joint tenancy, where they have cars and keep them free and clear in a bankruptcy.  It all depends on your individual situation, and a competent bankruptcy attorney can advise you about this.

Example: Ted wrecked his car without insurance. The accident was his fault, and the other driver is suing him. He still owes $6,000 on his car note, and now the car finance company wants to be paid. His brother Bill has a 1989 Camaro. When he bought it, he traded in another car that was not paid off, and his car note now includes money he owed on the old car, as well as what he owes on the new car. Bill’s car note is $457 per month. He is current, but wants to give the car back and get a “beater” so he can save some money.

Their friend Ralph is up to date in his car payments, has insurance, but has a lot of medical bills and credit cards. He wants to keep his car and get rid of the rest of his debt.

The Peter Francis Geraci Chapter 7 or 13 Solution: Ted files a bankruptcy and lists the other driver and their insurance company, as well as his own car finance company. Any debts to them will be discharged. He can save up some money, go buy another car, and no one can sue him for the accident, so he won’t lose his driver’s license.

His brother Bill surrenders his car, and doesn’t have to pay a nickel more. He now has no bills, and can save up to buy another car.

Ralph is getting rid of his hospital bills and his credit card debt, so now he can afford his car payment. It is up to date, and the car is insured, so he can keep his car even though he is getting rid of other debt.

Dial 1-800-CALL-PFG for a free phone mini-consultation, or make an appointment online 24/7 at www.infotapes.com.  Bankruptcy laws are in place to help you.  Who knows bankruptcy like Geraci Law?  Geraci Law has 30,000 5-star reviews 5starsince November 2016!

Read ALL ABOUT DEBT RELIEF at www.bankruptcybookbypeterfrancisgeraci.com.

Can I Get Rid of a Vehicle By Filing Bankruptcy?

Sometimes you just don’t want a vehicle. It may be worth far less than you owe, or it may be a junk that costs too much to repair. So the question is, how do you get rid of it and get something else? You’re probably not going to just get rid of the vehicle and walk or take the bus. So there are a variety of situations, and you need good legal advice before you make a false move.

Sometimes you just don’t want a vehicle. It may be worth far less than you owe, or it may be a junk that costs too much to repair. So the question is, how do you get rid of it and get something else? You’re probably not going to just get rid of the vehicle and walk or take the bus. So there are a variety of situations, and you need good legal advice before you make a false move.

Title loans Do you have an old vehicle with a title loan? If you do, the title loan company has a lien on the title. They will want you to pay them before they release the title. If the vehicle doesn’t run, or has been in an accident, you can’t junk it unless you get the title. Title loan companies seldom will take a vehicle back, rarely even repossess vehicles, because they don’t loan you enough money to make it worthwhile. If you file a bankruptcy, we can provide that you surrender the vehicle, then file a procedure called a motion to exempt and redeem. The court values the vehicle, and all you have to do is pay the value of the vehicle to the title company in which they are required to give you the title. This works very well when you have a junker is only worth $100 salvage value.

Under water Second situation that is very common is that you have a vehicle where you have a loan on it, in the loan payoff is much more than the vehicle is worth, and you don’t want it. Let’s say you bought a used car, and it’s now worth $8000. But you have 40 payments of $350 left to pay, or $14,000, the payoff and that depending upon how long you’ve financed it for, might be as much is $11,000 or $12,000. So if you wanted to give the vehicle back to the finance company, they would sell it at auction, probably $4000, and soak you with the auction costs, if you credit for the $4000 sales price, and you’d end up owing 8000 on the repossessed vehicle. Chapter 7 filing can eliminate that $8000 deficiency.

So Chapter 7 works very well when you owe a lot more than the vehicle is worth. If you want the over financed vehicle in a chapter 7, sometimes, we can make a deal, and a reaffirmation. So you can either surrender a vehicle that’s over financed and eliminate the deficiency, or possibly we can negotiate a better deal in bankruptcy, but you have to be willing, under Chapter 7 to surrender it if they don’t give you a better deal. There is another option called 722 redemption, similar to the junker, but if the value of the vehicle is $8000, you have to come up with the full value of the vehicle, or finance it, and if you do not come up with the $8000 722 redemption, you probably be financing it at 30% interest which is a terrible deal and you’d be right back where you started.

Chapter 13 The third situation involves keeping the vehicle, and filing chapter 13 to pay what the vehicle is worth, if the vehicle is over two and half years old, and even if it’s not 2 ½ years old to pay it at the prime rate +2%. Now if that sounds complicated, it is. One problem that we are running into is people are financing vehicles for 72 or 84 months, and then coming in to file a chapter 13, which can only last 60 months. They may even have a 0% interest rate. So if you have a long way to pay on a vehicle, and you’ve already got 0% interest, chapter 13 doesn’t help you. Depending upon your income, it may be wise you can qualify for chapter 7, to get rid of this monster and get a reasonably priced vehicle with a low payment.

There’s a lot more to vehicles in bankruptcy. Geraci law lawyers have filed over 100,000 bankruptcy cases, many of which involve cars, both chapter 7 and chapter 13. If your only debt is a car, you should not be doing a bankruptcy. But if your problem is greater than just the car payment, let’s look at what filing a Chapter 7 or Chapter 13 can do about your whole picture, and where the vehicle fits in.

That’s why you need an experienced Geraci law bankruptcy lawyer to figure all this stuff out.

Dial 1-800-CALL-PFG for a free phone mini-consultation, or make an appointment online 24/7 at www.infotapes.com.  Bankruptcy laws are in place to help you.  Who knows bankruptcy like Geraci Law?  Geraci Law has 30,000 5-star reviews 5starsince November 2016!

Read ALL ABOUT DEBT RELIEF at www.bankruptcybookbypeterfrancisgeraci.com

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