When financial woes overwhelm Tennessee residents, car loans might be among the first bills to go unpaid. Sometimes people choose to return the vehicle, or the lender repossesses it. No matter which action occurs, the consumer remains responsible for the unsatisfied portion of the debt. It is doubtful that the borrower could afford to pay it, but a bankruptcy filing could be one way to deal with the remaining loan deficiency.
Car loan deficiencies represent the amount still owed on the original loan, and they often include fees for repossession and storage. A bankruptcy plan approved by a court could eliminate the old car loan and stop a lender from pursuing a lawsuit against the debtor. A bankruptcy action, however, cannot halt an existing judgment that has established a wage garnishment, levy or lien. That situation requires a special motion to address the judgment.
Prior to losing a vehicle, the debtor could attempt to keep it as part of a bankruptcy. The court might allow one to pay off the car for a lump sum that totals the car’s current value instead of the financed amount. Buying a vehicle after a bankruptcy could be problematic but not impossible. Dealerships that cater specifically to people with damaged credit offer lending solutions post bankruptcy.
Auto loan deficiencies are just one type of financial obligations that can be addressed by filing for bankruptcy. Credit card balances are another. If Chapter 13 is an available solution, these types of debt can be restructured pursuant to a repayment plan prepared with the assistance of an attorney and then submitted to the bankruptcy court for its approval.
