If you are struggling with your finances, you might have gotten behind on your car payments. Unfortunately, this puts you at risk of repossession. If you haven’t made a payment in a while, the bank will likely try to find your car and take it away from you.
However, all hope is not lost. There are actually a few things you can do to stop repossession of your car, including:
1) Cut Back on Other Expenses
The first thing you might want to do is reassess your budget. Are there any expenses you can cut out? For example, maybe you could get rid of your cable or stop going out to eat at restaurants. These seemingly small expenses can add up after time. If you cut them out, you may have enough money to make your car payments.
2) Refinance the Loan
If you are having trouble making your car payments, consider asking the bank to refinance your loan. Explain how you are having financial difficulties and would like the opportunity to make smaller payments. They may be understanding of your situation and accommodate your needs.
However, understand that refinancing a short-term loan might mean higher interest. While you may have smaller payments right now, you will likely pay more money in the long run.
If you don’t have the option to cut out expenses or refinance your car loan, bankruptcy may be your last option to stop repossession. Once you file for bankruptcy, you can get get rid of all of your debt and keep your car.
If your situation calls for it, you may be able to put the debt into a Chapter 7 bankruptcy. This discharges all of your debt. But Chapter 13 might be better for you. Chapter 13 bankruptcy recognizes your unique financial situation and reorganizes your debts into a manageable payment plan. Once you have completed this plan, you own your car. It may be helpful to set up a consultation with an experienced bankruptcy lawyer Peoria IL trusts to talk about your options. He or she can look at your financial situation and help you determine if Chapter 13 or Chapter 7 is the right choice for you.
With all of these options, there is a good chance that you do not have to give up your car. Think all of these options over carefully before deciding on one.
Thanks to our friends and contributors from Smith & Weer, P.C. for their insight into bankruptcy and car repossession.