Portland Oregon Bankruptcy Lawyer Discusses Dealing with your Car after a Bankruptcy.
Car loans and getting them straightened out during a Chapter 7 bankruptcy can be a maddening experience. Typically if you want to keep your car and you don't have significant equity in it then you'll be able to continue to make payments.
Typically after filing a bankruptcy petition all payments on the car loan will stop. Then shortly before or after your meeting of the creditors your attorney or you (if you file on your own) will receive a 'reaffirmation' agreement. This is basically a contract between the lender and you stating that you want to keep the car and can afford to make the payments after the Chapter 7 bankruptcy. Its really important to make sure that you get that agreement filed within 45 days of your hearing and long term that you'll be able to make those payments.
One of the selling points by lenders for those agreements is that they are reported on your credit file and can help re-hab your score by showing on time payments. If you read some of my other blog posts you can see my feelings on the need for a credit score at all. Assuming you do want a higher score then these agreements can help. You do need to make very certain either yourself or through your bankruptcy attorney that that agreement is filed and shows up on your report. I have heard of cases where the client didn't see the old car debt on his credit report then went out to buy a new car. Since there wasn't a payoff showing on the credit report he assumed he could but a new car and was able to. Shortly thereafter he received notice that his old car account was past due and the lender was going to repo the car and hold him responsible for the debt. Since it was reaffirmed it may be impossible for him to discharge it and he'd be stuck with the payments on the new car plus the old one. Not a good result. In general these agreements go smoothly and allow debtors to remain in the cars they enjoy and can afford, both during and after their Chapter 7 bankruptcy.
If you have any questions regarding a Chapter 7 bankruptcy, Chapter 13 bankruptcy or general creditor/debtors issues, our attorney's would be happy to go over your options and answer any bankruptcy questions you may have. Feel free to use the contact form or call us and we can set up a time to talk to one of our bankruptcy attorney's.
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