Have did you buy your car using finance options over the last two and a half years ago? Then if you are struggling with paying back the car loan, the Chapter 13 bankruptcy in most cases help you reduce the rate of interest on the car loan or reduce the total balance of it.
Let’s understand further with a scenario – if your car loan balance is $20,000 at the end of three years and if the value of your car is just $10,000, then the remaining $10,000 converts as an unsecured debt (since the car doesn’t secure this). A percentage of this unsecured amount may or may not be paid off by you, in case you formulate a Chapter 13 repayment plan. In a lot of cases, the debtors repay only a small portion of their unsecured debts.
This opportunity is seen as savings for the debtor where the car loan balance is reduced. The assured benefit for the Chapter 13 bankruptcy filings is that the principal balance on the car loan can be reduced to the replacement value of the car – in the above case, it would be $10,000. The additional benefit for the debtor is that the interest rate would be set between four to six percent. Thus the claims that Chapter 13 bankruptcy for saving your cars and reducing your car debts is definitely a cheaper, effective and better choice compared to Chapter 7 bankruptcy. Chapter 7 bankruptcy is not consumer/ debtor friendly.
Living in Los Angeles? Getting a good car deal with your car debts is made possible with Recovery Law Group. Their bankruptcy attorney Los Angeles team can strike the beneficial plan around your car debts using Chapter 13 bankruptcy. Call in and book their appointments. The law firm also serves Nevada and Texas states.