Previously, I discussed how Chapter 7 bankruptcy can help you keep your car. Chapter 13 provides a similar solution, except you do not need the assistance of a second bank. In Chapter 13 bankruptcy, you can force the lender to accept the fair market value of the vehicle and then pay it off over the course of the plan (a Chapter 13 plan typically lasts anywhere from 3 – 5 years). An additional bonus available to those who file a Chapter 13 is that the interest rate on the loan can also be reduced.
There is a limitation on reducing the principal balance for a car loan in Chapter 13. You must have had the loan for at least 2 ½ years. If the debt is not at least 2 ½ years old then you cannot reduce the principal balance (but you can still reduce the interest rate).
If you have questions or concerns about your vehicle in a Chapter 13 or 7 bankruptcy, call to set up a free consultation. Call experienced Arizona Bankruptcy Attorney, Benjamin Skinner at JacksonWhite today! (480) 648-8975.