Bankruptcy with an Upside-Down Car Loan
Upside-down loans are a large contributing factor in the rising number of bankruptcies filed in the United States. Being upside-down on your auto loan simply means that you owe more on the vehicle than what it is worth. Unfortunately, becoming upside-down on an auto loan starts as soon as you drive off the dealership lot.
You can also become upside-down because of your loan terms. If your loan is for, let's say, six years, and your interest rate is 12%, then you are paying more money over a longer period of time, than what the retail value of the car is. If keeping your vehicle doesn't seem financially responsible, we are here to help you get auto financing after bankruptcy.
Upside-Down in Chapter 7
In chapter 7 you have three options to get right-side-up again. You can reaffirm, surrender, or redeem your vehicle. Reaffirming is promising to repay your loan as is, like you never filed at all. Surrendering your car means you are giving the vehicle back to the bank, and therefore, are wiping your hands of the loan. Redeeming your vehicle is when you buy your car outright from the bank, only for the value of the car instead of the balance of your loan.
Upside-Down in Chapter 13
If you are filing a chapter 13 bankruptcy, being upside-down on your loan, means you only have two options. The first option is surrendering your car to the bank. Your other option is the cram down process, meaning you can buy the car for what it is worth, much like redemption. Unfortunately, you only qualify for this program if you have owned your car for more than 910 days.
How We Can Help
If you are upside-down on your loan, and surrendering your vehicle seems to be the only option for you, here at Bankruptcy Auto Financing we can help you with financing a car after bankruptcy. Although the process is difficult it's not impossible, and we will do everything we can to get you approved. Start by filling out our online application and we will contact you with your approval information. We will get you matched up with a special finance lender that specializes in bad credit auto loans.
Remember we are not lawyers and cannot give out any legal advice. Before deciding what to do with your vehicle contact a bankruptcy lawyer. The situations discussed in this article are only our experiences of the years, and may vary with each customer.
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