If your car debt situation isn’t working for you, bankruptcy can provide you with opportunities to do some pretty great things to improve your situation. Under the bankruptcy code, interest rates and monthly car payments can often be lowered. Under some circumstances, the amount that you now owe on the car can be reduced as well. Plus if you are behind on a car loan, fresh start bankruptcy can make your vehicle safe and remove the need for you to come up with a ton of money to catch up. This is great news for many Oregonians because more and more, car debts have become a real problem.
Next to the mortgage and student loans, the car loan is normally your biggest debt ticket item. The average vehicle cost is now roughly $33,500. With car lenders extending car purchase loans to 6 years or more, and factoring in even the lowest of interest rates, you can easily find yourself owing $50,000 just to be able to drive to work.
Unlike mortgages which are at least tied to assets that rise in value, car loans are tied to assets that start to lose their value the moment they are given off the lot. The fact is that if you finance your vehicle over 4 to 6 years, you will probably owe more on it than it is worth until the third or fourth year of the contract.
If you do want to keep a car and you have a bad interest rate, Chapter 13 Bankruptcy will normally allow you to reduce the interest rate on your loan such that you pay no more than five percent interest on the remainder of your car debt. Play around with a debt calculator for a while and see how many thousands of dollars this could potentially save you.
If your want to keep your car but you are behind on it, Chapter 13 Bankruptcy can remove the worry about having to catch up. Your car will be placed in your plan and paid off over three to five years. In other words being behind no longer matters as long as you agree to pay off the car over that time period.
If your car is worth less than what you owe and you financed the car more than 910 days ago, Chapter 13 will enable you to reduce the amount of your loan to what the car is actually worth. This can often result in a savings of thousands of dollars.
What if you already have a great interest rate, your car is worth more than what you owe on it and your current? What if you just don’t like the amount of your car payment? Chapter 13 will enable you to stretch the car loan out over five years. This often means that rather than pay $500 a month or more on your car and all your other creditors on top of it, you pay, say, $300 a month to deal with all your creditors and the car.
If you have debt problems and part of that debt problem is your car loan talk to us today. Many of our clients let a car go before seeing us, not realizing that they could have kept the car and paid less on it every month. Let’s talk it through first and see what kind of options you have.
Set an appointment at one of our offices in Portland, Salem or Vancouver. If time is tight feel free to set a phone or video appointment right on the website. I am always happy to discuss the benefits of bankruptcy for Oregonians in bad car loans.