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Strategies to avoid repossession

Strategies to avoid repossession

Vehicle owners in Virginia and throughout the country are encouraged to talk to their lenders if they are struggling to keep up with their car payments. Generally speaking, lenders would rather work out a new payment plan as opposed to spending time and money repossessing a vehicle. In some cases, a lender will change the date that the payment is due. It is also possible that a financing company will defer payments to some point in the future.

Other options to resolve a car payment dilemma include asking for a loan to be modified or refinanced. Refinancing a loan can be especially beneficial for those who have seen their credit improve over the past several months or years. Doing so could result in a lower interest rate, which might lead to a lower monthly payment. However, this option may only be available to those who aren’t behind on their payments.

If none of these options work, bankruptcy could postpone a repossession. This is because individuals are typically entitled to an automatic stay or repossession of other creditor activity. At this time, a vehicle owner can choose to surrender the vehicle or catch up on missed payments. A cramdown may be available, and this allows a debtor to convert a portion of a secured loan to unsecured debt.

Debtors who are seeking relief from overwhelming debt may be able to receive it by filing for bankruptcy. A bankruptcy filing may allow a person to receive a stay of collection activities such as a repossession. An attorney may help a debtor learn more about the benefits of bankruptcy and how to apply for it. Other benefits of bankruptcy might include having certain debts discharged and keeping property for as long as the case is open.