The US auto market is likely headed towards a “perfect storm” of defaults and vehicle repossessions this year. Fitch Ratings reported recently that more Americans can’t afford their car payments than during the peak of the 2008 financial crisis. According to the Federal Reserve, Americans are also burdened with more auto debt than ever before with the average car loan reaching a record high of over $40,000. With consumers saddled with higher interest rates and crushing inflation, it’s no wonder that auto repossessions are increasing at a worrying pace.
Bankruptcy offers several powerful tools to help people who have fallen behind on their car payments. For example, Chapter 13 bankruptcy generally prevents repossession of your vehicle and can even force lenders to accept a lower interest rate. Additionally, if you’ve had your car for more than 2 ½ years it’s possible to “cramdown” the loan balance to the current value of the car. These tools often result in bankruptcy debtors significantly lowering their monthly car payment.
Bankruptcy can also help if your lender has already repossessed your car. Depending on state laws and whether the car has already been sold, filing bankruptcy can potentially force the lender to return the vehicle. Also, if you owe a deficiency or simply wish to surrender a vehicle, filing bankrutpcy can potentially discharge your remaining debt.
If you are worried about your car being repossessed please give us a call to speak with an experienced bankruptcy attorney about your situation. For more information visit us at www.kansascitybankruptcy.com. At W M LAW, we are “Here to Help”.