Look, things happen in life that are out of our control. Everything is going to plan, and then tragedy strikes whether it be a medical disaster, natural disaster, or just a disaster disaster. A vehicle payment does not always top the list of financial priorities, but lenders rarely care about the “why” when it comes to late or missed payments. So, what do you do when you need your car, but you are facing repossession?
Assess the situation
Before you know what your options are, you need to find out exactly how much money you need to find to save your vehicle from repossession. You also need to know how much time you have to pay. Factor in any fees associated with your loan agreement. If you have not directly communicated with your lender, you may want to ask what your options are, but do not give them too much information.
Payment options
Obviously, if you can afford to pay the bill and get current, that is the way to go. However, this is unlikely in most situations as non-payment is the reason for the situation.
If you are consistently having trouble making car payments, consider refinancing or trading the car for a more affordable one.
If you cannot trade the car, refinance, or make the required payments to get current, you may have another option, which is discussed below.
Bankruptcy and vehicle redemption
If you have explored all options and nothing will work for you to save your car, you may want to consider bankruptcy under chapter 7. Bankruptcy is a scary proposition for most people, but it comes with many benefits. In chapter 7 bankruptcy, you are able to shed unsecured debt (credit cards, medical bills, overdue utilities, etc.). An additional benefit when filing under chapter 7 is vehicle redemption.
Vehicle redemption is a tool available to the filer, which allows them to pay the lender an amount equal to the value of the vehicle. When this is done, the loan is considered paid off and you get to keep your car.
If you cannot afford vehicle redemption
It probably seems unlikely that someone facing repossession and considering bankruptcy can afford to give a lender a lump sum of cash equal to the value of the vehicle in question. The truth is, it is unlikely, but that is not the whole truth.
There are lenders that will lend bankruptcy filers the money they need to redeem their vehicle during bankruptcy. An example of this type of lender is 722 Redemption. Your attorney can help you through this process.
It should be noted that a redemption loan can have a somewhat lofty interest rate. However, the interest can be lower than the rate on your car loan, and this loan allows you to keep your car.
Losing your car often only makes a really bad situation worse. After all, how can lenders expect you to make payments if you do not have transportation to work? If you are facing vehicle repossession, you need the help of an experienced, licensed attorney. The Debt Relief and Education Foundation was created with you in mind. Contact our pro bono lawyers today for a free consultation.