With Chapter 13 bankruptcy, you are required to pay off some of your debt through a repayment plan. This is in contrast to Chapter 7 in which your debt is wiped clean.
If you have a car loan, you will likely be required to repay the debt as part of your repayment plan. How much you repay will be based on the age of the car loan.
Newer Car Loan
Is your vehicle loan less than 910 days old? If so, you are required to pay the full value. Even then, however, there are things you can do to make your situation more affordable. For example, you may be able to reduce the interest rate under bankruptcy guidelines, allowing you to lower your monthly payment.
Older Car Loan
Do you have a car loan that is older than 910 days? In this case, you may be granted a prorated payment amount based on the value of the car at the time of filing. The value of the car is based on the current market, meaning you are unable to do anything to change this.
Note: if you are behind on your car loan payment, you may be able to work with your lender to get back on the right track. In addition to your regular payment through your repayment plan, you may be able to make up missed payments from the past.
Just the same as any type of debt in Chapter 13 bankruptcy, once your repayment plan comes to an end you will be in a much better position. As long as you make your payment on time and in full every month, once your repayment plan concludes your financial life will be back to normal, at least as far as your debt is concerned.
Are you worried about what will happen to your car in Chapter 13 bankruptcy? Contact us to discuss your case, including the age of your car loan, to determine which steps to take next.