Many car owners in Texas face auto repossession when they fall behind on payments. Some consider filing a Chapter 13 bankruptcy to stop a lender from repossessing their vehicle. Before filing for bankruptcy, however, there are several other options to consider.
In many cases, lenders are willing to work with a person who is behind on their loan to avoid the costs of repossession. It may be possible to request a deferment or a change in a payment due date. Loan modification may be an option for debtors who are in good standing with their lender.
After considering other options, filing for a Chapter 7 or Chapter 13 bankruptcy may the best choice. Debtors who file for bankruptcy will need to consider whether they intend to surrender a vehicle in the bankruptcy or seek to reaffirm their debt and keep making payments.
When filing a Chapter 13 bankruptcy, debtors who owe money on a car loan may be able to reduce the amount owed on their vehicle to its current value. This option will not be available if the loan is less than 2.5 years old.
Anyone who is considering filing for bankruptcy may benefit from consulting with an attorney. A bankruptcy lawyer may be able to help clients decide what type of bankruptcy is right for them. Most people choose to file a Chapter 7 bankruptcy, but a Chapter 13 bankruptcy may be the best option for those who do not qualify to file under Chapter 7 and for those who want to keep property that is not exempt from liquidation under Chapter 7.
An attorney may also be able to help debtors who do not have a lot of debt explore other legal options. There may be ways for debtors to stop wage garnishment if they have been sued. Debtors in this situation may need to act quickly since there is a limited time to file a response.