What are my options under the Bankruptcy Law regarding Car Repossession?
Under the bankruptcy law, debtor has three options for car payment relief:
1. Redemption: If you pay the lienholder the fair market value of the vehicle in a lump sum payment, you can discharge the remaining debt.
2. Voluntary repossession: One way to achieve debt relief is to surrender your car to the lender after you file bankruptcy. This option is available if you are financing or leasing a car. After surrendering the vehicle, the lender can sell it at auction but will not be able to seek from you the difference between the balance of the obligation and the proceeds generated by the auction sale.
3. Reaffirm the debt: Another way to avoid car repossession is to receive a court approved contract that assures you will pay the car loan, despite it being a dischargeable debt. Some lenders are very particular about debt reaffirmation. If you do not reaffirm the debt during bankruptcy, and the underlying financing contract contained a provision that defines bankruptcy as an event of default, the lienholder may repossess the vehicle during or after the bankruptcy case, even if you are current on your payments.
Muoi Chea, a Sacramento bankruptcy lawyer will explain in depth the differences between voluntary car repossession and debt reaffirmation. Muoi Chea will help you decide which of the options best fits your financial needs.
If you defaulted on a car loan, and are worried about losing your vehicle, contact Muoi Chea Bankruptcy Attorney with Bankruptcy Offices in Sacramento, Stockton, and Fairfield, California to provide debt relief throughout Northern an Central California, from Solano County to Stanislaus County Modesto California.