Considerations for Using Chapter 13 to Avoid Repossession of a Vehicle

 

 

Chapter 13 bankruptcy includes a provision to prevent all collection activities after a bankruptcy case is filed.  This provision is commonly called the “automatic stay”.  In the case of repossession, it means that a lender (Creditor) must stop all repossession activities IMMEDIATELY upon the filing of the bankruptcy case.  It even means that the vehicle cannot be sold to anyone else for a period of time AFTER repossession so long as the buyer (Debtor) still has some “interest” or some “right” to take the vehicle back. 

 

These “interests” or “rights” may vary from state to state and; therefore, should be the subject of a whole separate discussion.  However, it does form the basis of one of the benefits of Chapter 13 bankruptcy.  The benefit is that the Debtor is usually able to get the vehicle back shortly after repossession if the bankruptcy case is filed during this period of time.  However, another issue to consider is that the Debtor is usually obligated to pay certain fees incurred by the Creditor as a result of having to repossess the vehicle if the Debtor intends to keep the vehicle. 

 

Most importantly, the Debtor should compare the cost of saving the vehicle in bankruptcy versus the amount of money the Debtor actually has invested in the vehicle.  The cost of saving the vehicle should include the fees for the bankruptcy (both attorney fees and filing fees) as well as Trustee fees and additional interest that may be incurred by keeping the vehicle in bankruptcy.  Once again, bankruptcy fees vary but it is typical to expect approximately $3,000.00 in bankruptcy fees in Chapter 13.   In addition, Trustee fees are typically 7-10% of the value of the debt included in the bankruptcy plan.  Therefore, a vehicle that has a debt of $20,000.00 would cost as much as an additional $2,000.00 in Trustee fees.  It is easy to see from this example that a vehicle for which a debt of $20,000.00 is owed may not be worth saving; unless the vehicle is worth over $25,000.00. 

 

However, the example above assumes that saving the vehicle from repossession is the only reason for filing the bankruptcy.  In most cases, the repossession or potential repossession of a vehicle may be only one of many reasons for filing the bankruptcy case.  Most consumers who have experienced financial difficulty that prevented them from making their vehicle payments are also having difficulty with other payments such as mortgage payments and/or credit card payments.  If the Debtor in this example has credit card debt of $5,000.00 or more and can eliminate some or all of it in bankruptcy, then it may still be a good alternative to seek bankruptcy protection.  

 

Two common situations where it may not be advisable to save a vehicle from repossession in bankruptcy are where the vehicle is worth LESS than the debt that is owed on it, and where the Debtor is not able to make the vehicle payments at all.  Chapter 13 requires that the Debtor must commence making payments to the Trustee within 30 days of filing the bankruptcy case.  And because of the fees mentioned earlier in this blog, it is unlikely that the Trustee payment is going to be much less than what the vehicle payment was originally.  So if the Debtor is still without income or unable to make a monthly payment to the bankruptcy Trustee, then filing bankruptcy will probably not be a good alternative for saving the vehicle.

 

There is one exception to the situation where the vehicle is worth less than the debt that is owed on it.  In cases where the vehicle has been OWNED for more than 910 days, (approx 2.5 years) then it is possible to “cram down” the debt owed on the vehicle to the current value of the vehicle.  Determining the value of a vehicle in this situation can be difficult, but where it is clear that the value is less than the debt, there is a definite benefit to using Chapter 13 to save the vehicle. 

 

Of course, every person’s financial situation is different and there may be other considerations for filing Chapter 13 besides the ones mentioned above. But if you are in danger of losing your vehicle to repossession you should speak to a bankruptcy professional and consider Chapter 13 as one of your alternatives.

 

 

 

Your Creditors are Coming!

In his famous midnight ride, Paul Revere made phase a simple phrase, “The British are coming!” The Boston silversmith didn’t say much on his ride into the history books, but he said what mattered: the nature of the threat and the way the threat would appear – not by land, but by sea.

 

One of the most important reasons why you need a dedicated bankruptcy attorney is to issue the warning you need when you face financial difficulty: the nature of the threat your creditors pose and the way that threat may appear. So, just how might creditors come if you default on your payments?

 

You probably won’t be surprised to learn that you lenders will come after assets you purchased on credit. Your car, your home and consumer products like a television or furniture may all be subject to repossession or foreclosure.

 

What may surprise you is that your creditors may also come after your intangible assets, such as bank accounts or earned wages. These repossession efforts can be highly disruptive and embarrassing and may result in your family, friends, co-workers and supervisors knowing that you’re experiencing money problems.

 

The bottom line is that if you’re facing financial distress and falling behind in your payments, in a matter of days or weeks you could lose your car, your income and your house. You can prevent the harshest effects of this process, but you need to act promptly and deliberately.

 

Calling the experienced attorneys at Fears Nachawati may be the right first step for you and your family. With years of experience, we know how to advise you on your legal rights with respect to your creditors. Contact us today for your free consultation.

Why Are You Thinking about Bankruptcy?

Americans consider filing for personal bankruptcy for a wide variety of reasons.

 

For some, their month-to-month costs already exceed their income and, as a result, they have been confronted with creditor state law claims, such as garnishment of their wages, repossession of property, like an automobile, or even foreclosure on a home. Where this is the case, bankruptcy may provide not only a longer-term solution to their financial predicament, but also an immediate reprieve, courtesy of the Bankruptcy Code’s powerful automatic stay provision.

 

For others, their income may exceed their operating costs, but their overall debt burden far exceeds their assets. Moving the mountain of debt they face may take years, even decades, and for some debtors, the prospective of managing this process is just too much to bear. Divorce, medical costs, or a legal verdict may have caused the immediate and profound spike in their personal debt level.

 

Recognizing why you’re thinking about bankruptcy and what you hope to gain from this life-changing legal procedure is important if you are to achieve a successful outcome. No approach to personal bankruptcy is easy. Chapter 7 takes place quickly, over just a few months, but the amount of change a debtor experiences is considerable. Likewise, Chapter 13 imposes less dramatic change to your day-to-day life, but typically occurs over a period of between three and five years. Living with your finances under bankruptcy court supervision for that long can be trying to any debtor – and their family.

 

What’s the right way forward for you and your loved ones? The attorneys at the Dallas law firm of Fears Nachawati can help you answer this and many other important questions. Before you make any major decisions with respect to your finances, talk to our dedicated professionals. The consultation is free and the advice could prove very helpful.

Put the Brakes on Your Car's Repossession

If you’ve fallen behind on your monthly car payments, your lender likely has the legal right to repossess your vehicle. From your lender’s perspective taking action may make sense. If your creditor doesn’t think that you can make timely payments, the value of the car may be the only thing standing between him and a bad debt.

 

From your perspective, of course, losing your car is the last thing you need. If you’re like most Texans, your car isn’t a luxury. It’s a necessity. To get to work in the morning, go home at night, or to buy groceries on the weekend, you must have your car. Losing access to your car – even temporarily – may cost you thousands of dollars in lost time, lost wages, and lost opportunity.

 

To tap the brakes on your car’s repossession, exercising your state rights and remedies may be required. To repossess your car, your creditor must have an attached, enforceable security interest in your car. If the creditor has fallen short in executing the necessary steps for an attached, enforceable security interest, you may be able to keep your car. Additionally, your creditor cannot breach the peace in the act of repossession. So, there may be practical limits on his repossession efforts, too.

 

To slam the brakes on your car’s repossession, filing for personal bankruptcy may be necessary. The Bankruptcy Code’s automatic stay and other powerful provisions may give you the ability to retain your car. By filing a Chapter 13 plan, you may be able to restructure your note, reducing the size of your monthly payments, and moving toward a more acceptable debt structure.

 

Need to find out more information about how to manage your creditors expectations and, if necessary, protect your legal rights and interests? The attorneys at the law firm of Fears Nachawati are prepared to help you do just that. With years of experience, we’re prepared to give you the advice you need to navigate the challenges you face.

 

Plan Your Timing, Prepare for Your Needs

The effectiveness of your bankruptcy may turn on your timing and your needs. With this in mind, it’s important to prepare carefully and time your filing accordingly.

 

Sometimes, a consumer debtors needs to act quickly. If you’re facing the possibility of a home foreclosure, apartment eviction, or car repossession, filing immediately will activate the Bankruptcy Code’s powerful automatic stay provision. As a result, pending legal actions – such as foreclosures, evictions, or repossessions – will stop in their tracks.

 

On the other hand, a consumer debtor sometimes needs to act deliberately. In general, there’s only one shot in the bankruptcy gun. You need to hit your target the first time. Additionally, the Bankruptcy Code’s look-back provision may make you unwind certain monetary transfers that took place in the months preceding bankruptcy. In some cases, waiting just a matter of days or weeks can save you thousands of dollars.

 

Finally, it’s important to speak with bankruptcy and financial professionals to understand more clearly what your financial future will look like after bankruptcy. If you undergo a Chapter 13 restructuring, you may have to pay a portion of your monthly earnings to your creditors. Living within this budget can constrain your lifestyle in new ways. You’ll want to prepare for that change before it comes.

 

Ready to speak with the dedicated professionals and skilled attorneys at Fears Nachawati. Our Dallas-area practice is ready to serve your needs and prepare you for your bankruptcy filing. For your free consultation, talk to us today.

Chapter 7 Bankruptcy Q&A

Often filing for a Chapter 7 bankruptcy is seen as the final step in a personal financial crisis. While this thought is understandable, it’s more realistic to view a Chapter 7 bankruptcy as the beginning of financial freedom.

Benefits of a Chapter 7 bankruptcy

Briefly, filing for Chapter 7 bankruptcy will place an automatic stay that will help protect you against:

• Liens on your paycheck or bank account
• Foreclosure of your home
• Repossession of your vehicle

The filing fees for a Chapter 7 bankruptcy

The fee to file a Chapter 7 bankruptcy in Texas is approximately $299. For more information go to: www.txnb.uscourts.gov/Clerks-Office/Filing-Fees.

Attorney fees involved in a Chapter 7 bankruptcy

When considering the fees associated with attorney fees, the big picture must be taken into account. Mistakes on a Chapter 7 bankruptcy application can end up costing you money in the long run. Furthermore, representation by a skilled bankruptcy attorney can help you deal with unethical action from overzealous creditors who may harass you or refuse to remove liens on your paycheck or other assets.

Many bankruptcy attorneys are willing to work out a reasonable payment plan so you can file for a Chapter 7 bankruptcy as soon as possible to avoid a lien on your paycheck or repossession of your vehicle.

For a free consultation to discuss your options, contact Fears | Nachawati by calling toll free 1.866.705.7584 or e-mail us at info@fnlawfirm.com
 

Chapter 7 Bankruptcy

Benefits of Chapter 7 Bankruptcy

When you file for a Chapter 7 bankruptcy, an automatic stay is placed on your debts. This means that your creditors must stop collection activity, including liens, and attempts to foreclose and repossess your property.

Contrary to what some creditors or collection agencies may tell you, there is nothing illegal about filing for bankruptcy. In fact, it is your right to file for bankruptcy.

Court fees

The court fee to file a Chapter 7 bankruptcy in Texas is approximately $299. For more information go to: www.txnb.uscourts.gov/Clerks-Office/Filing-Fees.

Bankruptcy attorney fees

Many bankruptcy attorneys are willing to work out a reasonable payment plan so you
can file for a Chapter 7 bankruptcy as soon as possible to avoid a lien on your paycheck, a foreclosure on your home or repossession of your vehicle. Additionally, most bankruptcy attorneys offer a free consultation to discuss your specific financial situation and to determine if a Chapter 7 bankruptcy is the best choice for you.

Contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or by e-mail at info@fnlawfirm.com  for more information on what bankruptcy can do for you. 
 

Chapter 7 Bankruptcy Fees In Dallas

Many debt consolidation companies want you to believe that a Chapter 7 bankruptcy is expensive and that it will destroy your credit. Nothing could be farther from the truth. Bankruptcy fees are relatively low compared to a lien on your assets or endless payment plans that you probably cannot afford on a long-term basis and that will eventually lower your credit score.

Court Fees

The fee to file a Chapter 7 bankruptcy in the Dallas bankruptcy court is approximately $299. For more information go to: www.txnb.uscourts.gov/Clerks-Office/Filing-Fees.

Bankruptcy Attorney Fees

While it is true that you can file for bankruptcy on your own, bankruptcy laws can be very complicated. Unless you have working knowledge of the current bankruptcy laws, you may miss something that can benefit you. For example, many people who file on their own still have problems with creditors sending them letters and removing the debt from their credit report. This is an aggressive tactic that many creditors use when they know someone does not have an attorney. They know these actions are unlawful but will continue because they know that the average person does not fully understand their rights under bankruptcy law. You can avoid being a victim of this tactic by speaking to an experienced bankruptcy attorney.

Many bankruptcy attorneys are willing to work out a reasonable payment plan so you can file for a Chapter 7 bankruptcy as soon as possible to avoid a lien on your paycheck or repossession of your vehicle.

For a free bankruptcy consultation for more information on what bankruptcy can do for you, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at  info@fnlawfirm.com