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Car Repossession 

It is not easy to take care of all the things that life requires without a car. If it is not going to work, picking up the kids, or going on a date, the car has become a modern necessity. Unless you live in an area where you have access to Uber or Lyft, it is almost impossible to live comfortably or get to work without a car. If you are behind on your car payments or about to fall behind, avoiding having your car repossessed is a major concern - primarily if you use your car to go to work.

So, can I get my car back if it was repossessed? 

If your car has been repossessed, federal bankruptcy law under Chapter 7 and Chapter 13 bankruptcy allows you to get your car back before it is sold at auction. As a debt relief and bankruptcy lawyer, I have focused my practice in the Chicagoland area and the surrounding suburbs on helping people get out of debt while keeping their essential property. If you live or work in the Chicago metropolitan area, including Cook, Lake, DuPage, Will, and Kane Counties, I am happy to meet with you and discuss how you can erase or reorganize your debts while keeping your car and other assets. 

So how can you help me keep my car?

The first thing is to negotiate with the finance company. The idea is to convince the finance company that it is better for them to keep your car and continue making the payments. Many factors go into convincing the finance company in a negotiation process. Ultimately, the finance company will have to believe that it makes economic sense to continue their relationship with you. Car finance companies sometimes are unreasonable and are unwilling to negotiate, so you may have to file a Chapter 7 bankruptcy and Chapter 13 bankruptcy to keep the car and in many cases, reduce the principal and interest.

So, will a Chapter 7 bankruptcy save my care?  

If you are behind on your payments on your car and file Chapter 7 bankruptcy, the car finance company is not allowed to repossess your car, or if they have repossessed it, they are not allowed to sell it because the automatic stay goes into effect when your case is filed. The automatic stays mean that your creditors, along with your car finance company, cannot take any action unless they get permission from the Court. Upon the filing of Chapter 7, the following options are available: 

1) Reaffirm your current car loan. If you are current on your payments, you can agree to continue making them by signing a Reaffirmation Agreement with the finance company, which must be approved by the Court. The agreement allows you to keep your car, and your on-time payments are reported to the credit bureaus. 

2) Don't reaffirm, but keep making payments. Under this option, you can continue making on-time payments but do not agree to be responsible for the loan. This is a good position to be in because if, for some reason, you fall behind on your car payments again and the car gets repossessed and sold, you will not be responsible for any resulting liability. You can walk away without any further worries from the finance company. 

3) Redeem your car with another finance company. You have the right to refinance your vehicle for its fair market value with another lender. This option is beneficial because most people owe more to their car than it is worth, so refinancing for a lower amount can save thousands of dollars. This process is called Redemption under the bankruptcy code. In cases where you owe more on the car loan than the car is worth, the remaining amount is erased and discharged. If you are thinking - who will give me a loan in bankruptcy to redeem my vehicle? There are specialized finance companies that focus on providing loans to Chapter 7 filers to redeem their vehicles. This can be a great option because you get to buy back your car at a much lower price. 

4) Negotiate with the lender. Some lenders are more willing than other lenders to negotiate a resolution even after you file for bankruptcy. Small lenders, out-of-state finance companies, and credit unions are usually more willing to negotiate instead of going through the whole repossession and sale process. Regardless of the bank, an effort is always made to reduce the car loan's interest rate and balance with the lender through negotiation. 

If you are in trouble with your car loan, I can guide you the right way. As a Chicago area bankruptcy lawyer, I have helped hundreds of people over the last 25 years to save their vehicles and, at the same time, reduce the principal and interest on their loans. 

So, what happens to my car loan if I file a Chapter 13 bankruptcy?

Chapter 13 is powerful because it allows you to restructure your car loan. You can reduce the principal, interest and stretch out the payments for up to five years through your Chapter 13 repayment plan. 

If your loan company has repossessed your car, a Chapter 13 bankruptcy will allow you to get the car back and restructure the loan to make it more affordable. 

If you are behind on your car loan, Chapter 13 can also help you keep your car and reorganize your other debts into an affordable repayment payment plan. 

In most Chapter 13 cases, your car loan balance and the interest rate are substantially reduced. A Chapter 13 repayment plan is created based on your income and expenses and approved by the Court. You have up to five years under your bankruptcy repayment plan to pay off the car loan. This opportunity to reduce the interest rate and the balance on your car loan makes it more affordable and more likely that you will make your payments in the future. I have enjoyed being a Chicago bankruptcy attorney because restructuring and erasing my client's debts has made their lives a lot better. 

So, I do not want to keep my car; how will a Chapter 7 bankruptcy help?

 In some cases, you may not want to keep your car but are concerned that if it gets repossessed, you will owe money to the finance company for their losses. A successful Chapter 7 bankruptcy would erase and discharge your car loan if your loan company repossessed your vehicle. If you have your vehicle, you have the option to give it back to your loan company and get a fresh start without the debt. A Chapter 7 bankruptcy would also include almost all your other debts so that you would get a new start. For over 25 years, as a Chicago bankruptcy attorney who has filed hundreds of cases for clients in Cook, Lake, DuPage, Kane, and Will Counties, I have creatively applied the bankruptcy laws to my clients' benefit and to the detriment of their creditors.   

Keep in mind that your loan company will sell your repossessed car at an auction, usually for a loss. They will then bill you for the difference between what you owe and what they received for the car. In almost all cases, you will end up without a car and debt. They also report the repossession on your credit report, making it virtually impossible to get a new car loan. Bankruptcy gives you options under federal law to move forward and put the past behind you. It is a great feeling to walk away from a bad car loan and not have to worry about harassing collection calls.

So, after bankruptcy, can I get financing for another car? 

Yes, you can get financing for another car if you can afford it. Remember, in most cases, your credit score will improve after your bankruptcy has been completed. Since your eligible debts will disappear in bankruptcy, creditors are more likely to give you another chance by extending credit. As a Chicago bankruptcy lawyer, I have successfully helped hundreds of clients restore and improve their credit after filing for bankruptcy over the last two decades. In a few simple steps, and you will be on your way to good credit again. 

You have the right to file bankruptcy under the US Constitution. You can file only once every eight years. If your car loan is causing your finances not to work, you should explore the available options in Chapter 7 or Chapter 13. bankruptcy. Freedom from debt does not happen by accident - you must be proactive. As an experienced Chicago area bankruptcy attorney like myself in your corner, your future will be brighter. 

So, how do I Start?

You need to know your options. Contact me at 312-229-5500 or online. As a debt relief and Chicago bankruptcy attorney practicing in Cook, Lake, DuPage, Will and Kane counties, I take great pride in virtually rewriting my client's car loans within the context of bankruptcy. If you need a reliable attorney who has helped hundreds of people throughout northern Illinois to explain the various options to you, do not hesitate to get in touch with me.

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I'm committed to helping you get out of debt and starting a new life. If you live in Chicago, Cook County, Lake County, DuPage County, Kane County, McHenry County, or Will County, contact me for a free consultation over the phone, in person, or video call.

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