Does Bankruptcy stop a car repo?

Does Bankruptcy stop a car repo?

If you fall behind on car payments, the lender could repossess the car. Does Bankruptcy prevent the lender from repossessing the car? Yes and no. It depends on what type of Bankruptcy you file.

A Chapter 13 allows you to retain the car. Chapter 13 is a repayment plan for 3 to 5 years. You may pay the car loan in full or just pay what the car is worth depending on when you purchased the car.

You can pay what the car is worth (instead of the full amount owed) if it was purchased more 910 days before the bankruptcy case. This is a great solution for a car you are “upside down on.”

Lastly, you can reduce a high interest rate on the car. The lender is entitled to the prime rate plus 1-3%. The prime rate changes over time but is currently 4.5%. So you may reduce the rate of interest to as little as 5.5% (and as high as 7.5%) right now.

Chapter 7 would not prevent a repossession. It would only delay it. In order to retain a car in Chapter 7 you must be current on payments (among other things).

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