When you get behind on your car payments and fall into default on your loan, you are at great risk of repossession. Banks repossess cars all the time: they track down the vehicle and take it from you, sometimes when you least expect it.
As a top attorney for car repossession Memphis trusts, I’ve helped people through this emergency thousands of times. Our firm works with people to stop repossession through bankruptcy. But we meet with people all the time who try other options before bankruptcy.
Here are 3 ways to stop repossession, including some of the advantages and disadvantages to each.
1) Change Your Budget
If you need to keep your car and you have money to spend on other things, start there. Change your budget and cut back on other expenses immediately. You can sometimes stop a repossession by paying off large chunks of the debt. A debt management company might help you look at your finances and decide how to make the right changes.
Unfortunately, this advice doesn’t work for most people. Most Americans don’t have a lot of wiggle room with their finances. You may not be able to set aside enough money from anywhere else, no matter how hard you try.
2) Refinance the Loan
Sometimes creditors will make a deal with you to help you make the payments. Even a small payment is better than nothing, so try talking with them about your situation. They may be willing to refinance the loan. If not, there may be other lending companies willing to help you refinance.
But be careful: sometimes when you refinance a short term loan like this, it costs you a lot more in interest. Be aware of any penalties and fees that might come with the new loan. And you also might have to make a payment upfront to get started. These costs can be worse than your original debt.
With both of the above options, you may not have the time to make these changes, or they may simply be impossible. But bankruptcy stops repossession in its tracks. It has the power of federal law behind it, so you can get out of debt and keep your car. Once you file bankruptcy, the creditors can’t come after you or threaten you anymore
Depending on your situation, you may be able to put the debt into a Chapter 7 bankruptcy, which discharges your debt and allows you to start over debt-free. But a lot of people need a Chapter 13 instead. Chapter 13 bankruptcy reorganizes your debts into a manageable plan. It’s based on your unique financial situation, so you can afford the payments. And once you’ve completed the plan, you own the car.
With these three options at your disposal, you should be able to keep your car if you want to.
Thanks to our friends and contributors from Darrell Castle & Associates, PLLC for their insight into stopping car repossession.