CARS AND BANKRUPTCY

Automobiles are some of the biggest concerns people considering bankruptcy usually have. Our law firm understands how important your car is to you and the questions you may have about how you can keep your vehicle.

What about my cars?

Cars work the same as houses. Typically, you are able to keep your vehicle in bankruptcy so long as you are not behind on your car loan and you plan to continue to make your payments. There is an equity limit (lower than a house but still reasonable) that you may have to keep your vehicle if you plan to discharge any debt in bankruptcy . If you are behind on your car payments, you can catch up in a Chapter 13 Bankruptcy or make arrangements directly with your lender in a Chapter 7 Bankruptcy. Also, there are companies that specialize in refinancing cars for bankruptcy debtors to rewrite their car loans, often for lower payments. If this interests you, please let us know and we will put you in touch with one of these companies.

Can I lower my car payment?

Filing a Chapter 13 Bankruptcy will allow you to lower your car payment in cases where the current fair market value of your vehicle is less than the current balance owed on your car loan and where you have been in your car loan for at least 2 1/2 years at the time you plan to file your Chapter 13 Bankruptcy petition. In such cases, your car payment can be extended for as long as five years to further lower your car payments. Also in such cases, if you are currently behind on your car payments, this arrearage will typically be discharged as you begin to make your lower payment in a Chapter 13 Bankruptcy. Furthermore, in many instances, your renegotiated car payment in a Chapter 13 Bankruptcy is at a lower interest rate than the interest rate of your original car loan.

What if my car is leased?

Leases are trickier in bankruptcy. As a general rule, we advise our clients to use the bankruptcy opportunity to reject any car leases and find a new car that they can purchase (on payments if necessary). If you desire to keep your lease, a motion will have to be filed with the court to approve that decision, and the court can always choose to terminate the lease over your objection if the court does not think the lease terms are in your best interests.

What about My Driver's License?

If your license is currently under suspension for unpaid parking tickets or an uninsured accident, bankruptcy is usually the best option and the quickest way to regain your driving privileges. Our firm can provide you with the advice and information you need to accomplish this. Typically, if you can make payments toward your unpaid tickets and/or uninsured claims against you, the Colorado State Department of Licensing will issue you your driver's license immediately by providing them with a copy of your filed Chapter 13 Bankruptcy petition.