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How Bankruptcy Can Help You Pay The Value Of Your Car vs. The Balance

Not many things today are made to last, and the minute you get the most current smartphone it seems like a new one is on the market. With so many advances in technology, you would think that the value of things would be on the rise. But, just the opposite seems to happen, with PC’s and other goods losing value the minute you get home from the store. You may have bought a computer a year ago and paid a premium, and that computer is now obsolete but you cannot even sell it on Facebook for a decent amount, meaning you cannot afford to upgrade. The same is true of vehicles, in fact cars are well-known for their instant drop in value the minute you drive off the lot. So, if you are not able to pay what you owe and you can’t sell your car to pay off your loan because your case is worth less than you owe, what can you do?

A Chapter 13 bankruptcy might be the answer to your car value problems, because in a Chapter 13 you are allowed to pay the value instead of the balance. This is how it works:

● You propose a repayment for the value, rather than the balance.
● You are allowed to reduce the interest rate as well as the balance.
● The combination of paying less than the balance, at a lower rate, means your payment is less.

When you are able to pay less than what is owed, you save money and you might even pay off your car note faster. The payment of less than what is owed for your car in a Chapter 13 is referred to as a cram down, and it is used all the time by people who prefer to pay an item’s worth and get out from under an upside down car loan. This cram down feather is only available in a Chapter 13, and in a Chapter 7 bankruptcy you would have to repay the balance if your intention is to keep your car. Chapter 13 has many other benefits, and you can take advantage of them if the circumstances warrant.

For more information about bankruptcy, contact us at We will help by coming up with solutions that help get you back on your feet.

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