Car Repossession Temporary Relief
You will still have to make car payments with temporary relief solutions, but repossession gets delayed. You can request a forbearance, which temporarily pauses your car payments. Another option is to apply for deferment, allowing you to pay for missed car payments at the end of your car loan. If these solutions do not work out, you can informally engage with your lender for car loan readjustments.
Car Repossession Permanent Relief
Permanent solutions can allow you to keep your car without fear of repossession. You can settle the entire amount owed, including any late car loan payments. Moreover, you can refinance, which replaces your existing debt with a more manageable one, provided your credit is good. In contrast to forceful repossession, voluntary vehicle handover may minimize additional costs and harm to your credit. If a lender repossesses your car due to unpaid payments, it can hurt your credit score and add other costs.
Bankruptcy under Chapter 7 and Car Repossession
Chapter 7 bankruptcy can be helpful if you’re having financial difficulties and are in danger of having your car repossessed. Most unsecured debts are discharged, and an automatic stay is put in place to prevent repossession temporarily. You must take action against secured debt, such as car loans, to keep your vehicle.
Agreement for Reaffirmation of Continued Loan Payments
Reaffirmation agreements are legally enforceable contracts in which you and the lender agree to keep up your payments as though you had never filed for bankruptcy. According to the bankruptcy code, maintaining your loan payments is essential to prevent car repossession. Reaffirmation also means you are still liable for further payments because the debt will not be discharged in bankruptcy. If you keep your end of the bargain, the lender cannot take the car back.
Reaffirmation is helpful if your monthly payments are reasonable and you depend on your car for everyday tasks or employment. An affordable repayment plan can be pivotal in ensuring these payments remain manageable. Repossession without bankruptcy protection could occur if payments are not made after reaffirming.
