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Can I stop debt collectors from taking my car?

People find themselves overwhelmed with debt for a variety of reasons. No matter what the cause, anyone struggling with debt and in danger of debt collection proceedings may begin to feel hopeless. This is natural, but it is important to know that debt is not insurmountable or a bottomless pit that you can't climb your way out of. There are options available and a variety of solutions for your debt problems, which can help you keep your car. The right solution for you will depend on your personal circumstances and eligibility.

Stop auto repossession

Bankruptcy is often the best way to keep your car. There are different eligibility requirements for Chapter 13 or Chapter 7 and it is important to find the right match for your situation. Here are some differences between the two:

Chapter 13 enables you to create a repayment plan to pay back debt over the next 3 to 5 years (typically). This allows you to keep your car and to discharge some of your unsecured debt at the close of the repayment plan. To be eligible for Chapter 13 you must have a steady job and be able to make your required payments.

In addition, under Chapter 13, you may be able to restructure your auto loan payments based on the current market value of your car. This is called a loan cram-down, it applies if you have owned your car at least 910 days and your loan amount is more than the car is worth.

Chapter 7 enables you to discharge some of your debts, like medical and credit card bills and make a fresh start. This should free up some of your funds and make it possible to pay back your auto loan debt and keep your vehicle. Note you will only be able to keep your car if you pay your missed payment amounts and stay current on future auto loan payments.

Whether you file Chapter 13 or Chapter 7, the moment you file for bankruptcy the court will order an automatic stay. This means that creditors have to stop collection activities, including trying to repossess your car, during bankruptcy proceeding. This is a temporary order, but gives you some immediate peace of mind that you will still be able to drive to work, to the grocery store, to events for your kids, while you are going through bankruptcy.

Bankruptcy may help

If you are in danger of losing your car and have questions about your options, your first step should be to contact an attorney. Robert C. Nisenson has been helping clients with debt relief solutions for over 30 years. Call 732-518-8038 and set up a free consultation to discuss your situation and help you determine if bankruptcy is the best fit for you.

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