Falling behind on car payments can create serious financial stress, especially when you depend on your vehicle to get to work, school, and around Phoenix. If overwhelming debt has made your auto loan difficult to manage, a Phoenix bankruptcy & car loans lawyer from Lerner and Rowe Law Group can explain your options and help you determine whether bankruptcy may provide relief.
Bankruptcy does not necessarily mean you have to give up your vehicle. Depending on your circumstances, Chapter 7 or Chapter 13 bankruptcy may provide ways to address car loan debt, stop collection efforts, or potentially prevent repossession.
Contact us today by phone or online to schedule a free, no obligation consultation. Our Phoenix bankruptcy legal team is 100% focused on helping bring clarity and relief to those in financial distress.
Can Bankruptcy Help With Car Loans in Phoenix?
Car loans are secured debts, meaning the lender generally has a lien against your vehicle. Filing bankruptcy does not automatically eliminate that lien. However, bankruptcy may provide options for dealing with the debt while protecting your financial interests.
The right approach depends on factors such as whether you are current on your payments, how much you owe, the value of your vehicle, and whether you qualify for Chapter 7 or Chapter 13.
A Phoenix bankruptcy lawyer can review your finances and explain which options may apply to your situation.
Chapter 7 Bankruptcy and Car Loans
Chapter 7 bankruptcy can discharge many types of unsecured debt, and qualifying car loan debt may also be addressed through the bankruptcy process. However, because an auto loan is secured, the lender generally retains its lien on the vehicle.
If you are current on your payments and have sufficient exemption protection, you may be able to keep your vehicle by continuing to make payments. Depending on the circumstances, you may also consider reaffirming the car loan.
If you are behind on payments, your options can be more complicated. An attorney can explain the potential consequences of keeping, surrendering, or reaffirming the vehicle before you make a decision.
Chapter 13 Bankruptcy and Car Loans
Chapter 13 bankruptcy may be useful for Phoenix residents with regular income who want to keep their vehicle while catching up on missed payments.
Chapter 13 generally involves a three- to five-year repayment plan. If you are behind on your car loan, the plan may allow you to address past-due payments over time rather than having to pay the entire delinquent amount immediately.
In some circumstances, Chapter 13 may also allow a qualifying debtor to reduce the secured portion of a vehicle loan based on the vehicle’s value, potentially making the debt more manageable. Whether this option is available depends on the specific circumstances of the loan.
Can Bankruptcy Stop a Car Repossession?
If you have received notices warning that your vehicle may be repossessed, you may feel like you are running out of options. Filing bankruptcy generally triggers an automatic stay that stops many collection activities, including certain repossession efforts.
However, the automatic stay is not necessarily permanent. A creditor may sometimes ask the bankruptcy court for permission to continue collection activity.
Acting quickly can therefore be important if your vehicle is at risk. Choosing a top Phoenix bankruptcy attorney can review your situation and explain what filing could mean for your car.
Phoenix Car Loans & Bankruptcy Lawyer: Car Repossession
Bankruptcy may still provide options if your vehicle has already been repossessed. If the lender sells the vehicle for less than what you owed, you could potentially be left with a deficiency balance.
Depending on the circumstances and the type of bankruptcy filed, a qualifying deficiency balance may be dischargeable. Chapter 13 may also provide a way to address certain debts through a repayment plan.
The sooner you speak with an attorney, the more clearly you may understand your available options.
Contact a Phoenix Car Loans & Bankruptcy Lawyer
If you are struggling with car payments, facing repossession, or dealing with debt that has become difficult to manage, you do not have to navigate your options alone. The Phoenix bankruptcy team at Lerner and Rowe Law Group can review your circumstances, explain your potential options, and help you determine whether bankruptcy may be appropriate.
Call Lerner and Rowe Law Group to schedule a free consultation. You can also fill out the online contact form or use LiveChat to connect with the team and take the first step toward addressing your financial difficulties.