Filing for bankruptcy is probably the last thing anyone wants to do, but there are ways to keep the situation from turning into a nightmare. Get a bankruptcy lawyer to help you understand the options available to you, especially when you have a car loan while you’re bankrupt. By being prepared, you can face the court and admit that although you’re incapable of settling your debt, you can still work your way around to restoring your finances.
Excluding Your Vehicle
Sacrificing your car loan and including it in the bankruptcy may be a smart move if you can’t afford the monthly payment. If you use your car to search for work or bring you to the office, however, it will be a wise decision to reaffirm your obligation on the car loan. As long as you still pay them, you can keep your car, which is essential if it is your only source of transportation.
Bargaining Your Car Loan
If your car loan debt is almost settled, bargain with the lender for a lesser payoff. Even though this will still show up on your credit, it is not as negative as bankruptcy. Bargaining will make it more manageable for you to continue processing the payments.
Reaffirming Your Car
By reaffirming, you are complying with the terms of the loan by continuing to process the payments. Your lender will then need you to accomplish reaffirmation paperwork, mostly during the 10 days of the release of your bankruptcy.
The bankruptcy process will take a lot of time and most attorneys will suggest you take a break from using your credit cards once you’ve filed for it. If you really want to keep your vehicle, however, don’t fall behind on your payments while you’re trying to reaffirm and acquire the title of the car.
While you’re undergoing the bankruptcy procedure, start rebuilding your credit score. Make sure to thoroughly observe your credit reports to ensure that your car loan isn’t a part of the debts charged off by the bankruptcy.
