Facing the possibility of losing your vehicle is incredibly stressful. The constant calls from your lender, scary repossession threats, and the fear of waking up to an empty driveway can quickly escalate into a major financial emergency. Losing your vehicle could severely impact your ability to work, attend school, and keep important appointments. Here’s the good news: Chapter 13 bankruptcy can help by providing you with a structured plan to get current on those missed payments. However, to secure this vital protection, immediate action is required. Contact our experienced Gillette Bankruptcy Lawyers as soon as possible. 

Why Are Missed Car Payments So Serious?

Being late on your car payments gives the lender a ton of power. In fact, if just one of two payments has been missed and you haven’t talked to them about a plan, they can often start the process repossess your vehicle. It can happen incredibly fast, too, and often without much warning. After your vehicle is taken, it is usually sold at auction. If the sale price is less than what you owe on the loan, you will still be on the hook for the remaining “deficiency balance.”

In addition, losing your car is a massive headache, as it can make it much harder to get to work, mess up crucial appointments, and tank your credit score. Car repossession can turn a small financial snag into a huge, long-term mess. That’s why the best move is usually to find a way to stop it and catch up, instead of letting the car go.

How Can Chapter 13 Help You Catch Up on Missed Car Payments?

Under Chapter 13, you will propose a monthly payment schedule to a trustee, enabling you to catch up on certain debts over time (typically 3 to 5 years). You will continue making ongoing payments as part of or alongside the plan and retain your property if you comply with the court-approved plan.

For those with a steady income behind on secured debts like a vehicle or home, Chapter 13 can be utilized to catch up without losing property. Filing Chapter 13 triggers an automatic stay, which temporarily halts collection efforts. This usually:

  • Puts a lock on repossession
  • Silences most collection calls and letters
  • Freezes certain lawsuits and wage garnishments

If your lender is about to repossess your vehicle, the automatic stay provides crucial breathing room while you plan how to catch up on your car arrears.

Chapter 13 also offers ways to restructure a car loan:

  • Adjusting Interest: Potentially pay a lower interest rate.
  • Stretching Payments: Spread the loan over the plan’s life, lowering the monthly payments.
  • Cramdown: If eligible, the secured debt can be reduced to the car’s current value, treating the remainder as unsecured debt, which may be largely discahrged.

These options are subject to federla nd lcoal alws and are highly case-specific. Chapter 13 can also stop or reverse repossession. However, timing is critical; once the vehicle is sold, options are severely limited.

Falling behind on car payments is a common situation, and it doesn’t automatically mean vehicle loss. At 307 Bankruptcy, we are prepared to help you understand your options. Connect with our firm today to schedule a consultation.