A new vehicle can quickly depreciate in value, and the owners may find themselves owing more on the balance than what the vehicle is worth. Virginia residents who still owe money on a loan for a vehicle that has been repossessed or voluntarily surrendered may be able to have the balance discharged in bankruptcy.
Once individuals file for bankruptcy, lenders can no longer pursue them for the debt they owe. Bankruptcy will also halt lawsuits that have been filed against the consumer. However, if there are already judgments for liens, garnishments or levies in place against the consumer, it would be necessary for the consumer to file a special legal motion to have the actions ceased.
Filing for either Chapter 7 or Chapter 13 bankruptcy if one owes a significant amount of money on a car loan deficiency may seem like the best option, but the decision to do so should only be made after significant consideration has been given. Bankruptcy has the potential to negatively affect an individual’s credit and life, so consumers should weigh the benefits and consequences before filing.
Bankruptcy may also be an option for those who are unable to make their loan payments but want retain ownership of the vehicle. They can have loan deficiencies waived if they file for Chapter 7 bankruptcy and then redeem their vehicle to pay the current value of the vehicle to the lender in one payment. If debtors lack the cash to redeem their vehicle, they can reaffirm their car loan by agreeing to make payments in order to prevent repossession.
Bankruptcy is a legal procedure that individuals may use to resolve some of their financial issues. It can be used to pay off creditors and protect property. A bankruptcy attorney may evaluate a client’s financial situation and describe the eligibility requirements of the available chapter.