Whether to keep or not keep car payments is something that I typically have to address with my bankruptcy clients. There are several options available to bankruptcy filers. This blog post will focus on situations where the debtor wishes to retain the car and payments.
Be Careful After Filing Your Bankruptcy
Certain bankruptcy laws make it illegal for a creditor to attempt to collect a debt against a person in a bankruptcy case. This applies to mortgage companies and car lenders too. This means that a car lender will stop sending you paper statements after you file your bankruptcy case. After all, they aren’t allowed to ask you for money while you are in bankruptcy. If you have automatic payment arrangements made through your lender, they will stop deducting your car payment each month too.
Some bankruptcy filers mistakenly believe that they don’t need to keep making their car payments because they stopped receiving statements. This is not true, especially if you intend to keep the car after bankruptcy.
Keep Your Car, Keep The Payments
If you have decided to keep a car with loan payments after bankruptcy, it is your job to keep making the payments. As I stated above, you won’t receive paper statements while you are in bankruptcy. It is still your responsibility to mail in your payments on time.
If your car lender doesn’t see you making your regular monthly payments, they might assume that you no longer want to keep the car. The lender can go into the bankruptcy court and file a request to repossess the vehicle from you.
As an example, if you don’t make three months of car payments, the lender will get nervous and ask for relief from the court. You will then have to bring your car loan current in order to avoid the court granting the lender the right to repossess your car. If you haven’t saved the car payments, you might find it difficult to bring the account current.
There are many pitfalls for the unwary in bankruptcy proceedings. Please call my office at (916) 333-2222 to discuss how my law firm makes bankruptcy in Sacramento easy.
