Sunday, March 18, 2012

P is for Payment: Behind On Car Payments After Filing Chapter 7

Yes, "P" is for Payment.  So, you just filed a Chapter 7 bankruptcy, and at the time of filing, you were current on your payments on your vehicle. You intend to reaffirm (keep) the vehicle. But now, after filing and before your discharge, you have become late on a payment. How will this effect you?

First, when presented with this question, the number one concern usually centers around whether the creditor can repossess the vehicle. The short answer is “That Depends”. When you file bankruptcy, and automatic stay is put in place preventing any collection efforts until one of several things happen.

First, if the case is dismissed, the automatic stay is lifted; that is to say, the creditor can commence, or continue, collection efforts including the repossession of the vehicle. If your case is dismissed, you are no longer in bankruptcy, therefore, you are no longer afforded the protections of bankruptcy. Depending you the circumstances surrounding your dismissal, you may have to wait before you can refile.

Secondly, you are suppose to perform your intention (reaffirm, surrender, or redeem) within 30 days after the date set for your meeting of creditors, also known as the 341 meeting. If you fail to perform your stated intention, then the creditor can go after the asset. However, from a practical standpoint, the creditor may wish to seek permission from the court before going after the vehicle.

If your initial intention regarding the vehicle is to reaffirm it, you may want to consider if this is really in your best interest. If the payments get behind after you have signed and filed the statement of intentions, and you have been granted a discharge, the creditor can repossess the vehicle, and go after you for a deficiency balance the same as if you had not filed bankruptcy. The difference is, it may be a while before bankruptcy can help you again.
Other notable sites for "P is for ...":

Pay Advice    New York Bankruptcy Lawyer, Jay S. Fleischman  

Phone Call    Cleveland Bankruptcy Attorney, Bill Balena   

Plan    Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell

Preference    Maui Bankruptcy Attorney,   

Preferences    Colorado Springs Bankruptcy Attorney Bob Doig   

Pride    Southgate, Michigan Bankruptcy Lawyer, Christopher McAvoy   

Property of the Estate    Wisconsin Bankruptcy Lawyer, Bret Nason   

Privacy    Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein   

Also (URLs not available):

Prior Bankruptcy, Will it be a problem?    Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
Priority Debt    San Mateo Bankruptcy Lawyer, Jeff Curl