One of the misconceptions about bankruptcy is that you can file a case, but still keep your property without making payments. The truth is that if you have things you want to hang on to, like your house or car, you do have to keep making payments. If you do not make the required payments, the lender will seek permission from the Bankruptcy Court to seize the collateral. And while your lender cannot ask you to pay the debt after they get permission to take it back, they do have the right to repossess or foreclose if payments are not made. One way to avoid this situation is to enter into a reaffirmation agreement with your lender, whereby you agree to keep making the payments just the same as you were before the case was filed. This means your contract is still enforceable, even after your bankruptcy case is over. Many people are hesitant to reaffirm a debt for this reason, but doing so can be beneficial if you negotiate more palatable repayment terms.
A reaffirmation is common in Chapter 7 bankruptcy cases, and it is possible to get the lender to agree to more manageable terms. But not all lenders will let you pay less than what you owe in a reaffirmation agreement, or even agree to reduce the interest rate. Thus, many consumers who reaffirm can expect the same payment terms as the original contract. If you want to pay a different amount, Chapter 13 may be your best option. In a Chapter 13 you can:
• Pay the value of your vehicle rather than the balance due.
• Reduce the interest rate on your car loan, which will lower the payment amount.
• Pay a portion of your unsecured debts, such as credit cards, rather than paying the full amount owed.
Paying a lower balance and rate for your car and less than what is owed on your credit cards, will put more money in your pocket each month. When you have money left over, you can pay other bills and get ahead. If you are having a hard time making your dollars stretch as far as they need to, call us for help. We will explain the differences between Chapter 7 and Chapter 13 bankruptcy, and let you know what type of case you are eligible to file.
For more information about Chapter 13 bankruptcy cases, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.