Tow TruckDid you know that you can easily surrender your car in a Chapter 7 bankruptcy? You can escape high loan payments, punishing interest, and avoid lawsuits.

If you lease or finance a car and attempt to surrender the car outside of bankruptcy, your lender will likely charge you all sorts of fees. Many times, a lender will sue a borrower for the “deficiency balance” of the loan.

A deficiency balance is the amount of money you still owe the lender even after surrendering the car. Deficiency balances can easily be many thousands of dollars after the dust has settled. It doesn’t matter if you voluntarily surrender your car or whether it is repossessed — often time there is a debt owed.

Surrendering a car during the bankruptcy process is completely different. At the outset of your case, we notify the Bankruptcy Court and your lender that you intend to surrender your vehicle.

After your case is started, your lender may attempt to talk you out of surrendering your car. They would prefer that you keep the car and continue making payments. However, the decision is 100% yours to make.

Some lenders may wait until after your bankruptcy case is over to retake possession of your car. Others are more aggressive and will seek the return of the car before your bankruptcy is over.

Once you make the decision to surrender your car in the bankruptcy, it is best that you start making alternative transportation arrangements. Most lenders will communicate with my office or my clients directly to set up a day and time to voluntarily surrender the car. Others, like Wells Fargo, are very inconsistent and have mislead my clients in the past. Therefore, once the surrender date approaches, it is wise to remove all of your possessions from the car just in case it is taken without your knowledge.

If you are not sure what you want to do with your car, the safest bet is to indicate that you want to keep the car and continue making payments. You have until the end of your bankruptcy case to change your mind. In fact, this is fairly common.

Please call my office at (916) 333-2222 if you have any questions about surrendering your car in a Chapter 7 Bankruptcy in Sacramento. 

Sacramento Bankruptcy Lawyer Rick MorinBankruptcy isn’t always the right fit for people in financial distress. Luckily, there are bankruptcy alternatives that can provide relief under the right circumstances.

Bankruptcy is intended to provide relief for innocent people who find themselves in unfortunate circumstances. Typical issues that lead to bankruptcy include the loss of a job, an investment gone south, or the cumulative effects of too much debt.

Not everyone wants to file bankruptcy. Others don’t qualify for a Chapter 7 Bankruptcy and Chapter 13 Bankruptcy isn’t the right fit. Luckily, there are alternatives that might provide some relief.

Bankruptcy Alternative: Voluntary Debt Repayment Plan

One alternative is to work out a debt repayment plan directly with your creditors. Depending on your creditor, this might be a viable option. Other creditors aren’t so willing to help a distressed consumer.

The time to work out a repayment plan is prior to the creditor filing a lawsuit. Without proper representation, a lawsuit by your one of your creditors will typically result in a judgement including attorney’s fees, interest, and court costs. With a judgement in hand, not many creditors will be willing to work out a favorable deal.

Bankruptcy Alternative: Restructure Your “Bad” Debt

Another option is restructuring your debt. This is an option for a person that finds him or herself with too much “bad” debt. When I say bad debt, I mean high-interest debt or debt that is draining too much of your monthly income.

A person in this situation may try to restructure the debt by obtaining a new loan at more favorable terms from a different creditor, and then using those funds to pay off the other loan. A high interest car loan comes to mind. A person seeking to restructure their debt must do so before their credit is impacted by late pays, no pays or collection activity. So it isn’t always an option.

Bankruptcy Alternative: Do Nothing!

This other bankruptcy alternative might sound like bad advice. But sometimes it is the best option: do nothing. You might have heard a lawyer say that a person is “judgement proof.” What they are really saying is that the person has no assets or income worth taking. All the judgements in the world won’t get any money out of such a person.

Ignoring the phone, changing bank accounts, or even moving, can help provide short-term relief from your creditors. But beware: I have seen judgement creditors come back 10 years post-judgement and wipe out thousands of dollars from a client’s bank account. Without any warning! Hiding only works for so long.

Choosing the right tool for a given task is very important. Ultimately, it is up to you to determine how best to manage your finances and legal affairs. I really enjoy answering questions regarding Chapter 7 or Chapter 13 bankruptcy or bankruptcy alternatives. Please call my office at (916) 333-2222 for a free bankruptcy consultation.

Sacramento Bankruptcy Lawyer Rick MorinMany of my bankruptcy clients have had a car repossessed. Car repossession can be very expensive. Many times, a customer is left with a large bill from their lender even though they do not own the car any more. Bankruptcy can help in this situation.

When a car is repossessed by a lender, the car will be sold at auction. The price of the car at auction will be far less than the price of the car when it was new. Even though a repo seller must take “commercially reasonable” steps to get a fair price for the car, the price that these cars sell for is typically very, very low.

The lender will then bill the car owner for the difference between the price they got for the car and the outstanding balance of the loan. This is known as a “deficiency balance.” The bill typically also includes a lot of fees and penalties as well.

As you can see, car repossession will result in a large bill of many thousands of dollars. A person in this situation has to ask themselves why they should continue to pay for a car that they no longer own.

Like many consumer debts, a large deficiency balance from an auto repossession can end up in court in the form of a lawsuit. Lawsuits end in judgements, and judgements will end in bank levies, wage garnishments and liens on your property.

Chapter 7 bankruptcy will wipe out any car repossession deficiency balance. It will also wipe out the fees, interest and lawsuit costs that typically go along with a car repo. While Chapter 7 Bankruptcy might not be right for everyone with a car repossession, I have seen it really help people with car repossessions in their past.

If someone is demanding that you pay thousands for a car that has already been repossessed, please contact Attorney Rick Morin to discuss Chapter 7 Bankruptcy. He can be reached at the office at (916) 333-2222.

Sacramento Bankruptcy Lawyer Rick MorinBankruptcy law is clear: once your debts are discharged in bankruptcy, no one can legally collect the money from you. However, some unscrupulous creditors will still demand that you pay debts that have been discharged in bankruptcy. There is no reason to put up with this type behavior.

This article from the New York Times shows just what can happen. Bank of America, one of the largest banks in the world, harassed a debtor even after a bankruptcy judge ordered the bank to stop contacting the borrower. It took a contempt order from the judge and $10,000 in fines per month to get the bank’s attention.

Unlike a lot of other bankruptcy law firms, I will aggressively pursue creditors who violate bankruptcy laws. I always tell my clients that they should contact my office immediately if a creditor contacts them during their bankruptcy case. Even after their bankruptcy case is over, I encourage my clients to get in touch if someone demands payment from a discharged debt.

In some cases, I can go to court and ask for civil damages from a creditor that violates bankruptcy laws. I see this is an effective way to get the attention of creditors. And maybe even get you some damages from your creditors! We are all required to comply with the law, even large banks and credit card companies. There is no reason to put up with harassment after your bankruptcy is over!

Here is what you do if you are contacted by creditors or bill collectors after your bankruptcy case is over:

1. Make sure you find out who is contacting you. Ask for their name, who they represent, and their address / phone number.

2. Contact your Bankruptcy Attorney.

3. If the creditor continues to contact you, keep a good log of each contact. The more they call you, the more that they are in trouble.

If you are being harassed by creditors after your bankruptcy case is over, contact Sacramento Bankruptcy Attorney Rick Morin. I can be reached at (916) 333-2222.