If you are facing financial hardships and struggling to pay your bills, the prospect of losing your car can be extremely frightening. The loss of one’s car because it is repossessed by the auto finance company can have devastating consequences including the loss of employment, which may further exacerbate your financial hardships. There are effective ways to save your car from repossession in Arizona if you seek prompt legal advice. Many people are overwhelmed by the mountain of debt that they are facing and instinctively bury their head in the sand because it seems like the situation is hopeless. If you ignore your financial crisis, you may allow otherwise available options to be foreclosed.
The best way to save your car if you are in a financial crunch is to seek legal advice from an experienced Arizona bankruptcy lawyer. A bankruptcy filing, whether a Chapter 7 or Chapter 13, may provide immediate protection from pending repossession of your car. When a bankruptcy if filed, an automatic stay goes into effect that prevents the finance company from taking any collection action including repossession of an Arizona vehicle. In many cases, you may be able to keep your car as long as you continue making payments on the vehicle.
Often debtors who go through the bankruptcy process will decide to “reaffirm” their car loan. This essentially means that instead of surrendering your car, you agree that the loan will survive your bankruptcy discharge, and you agree to continue making payments. While a formal re-affirmation agreement is often executed, this is not always the case. It is always important to discuss the merits and disadvantages of reaffirming a debt to save your car. Most times a car that is financed will have negative equity so that it may not be a good investment to reaffirm the debt. This will also mean that your car loan obligation survives your bankruptcy discharge. Because you will typically be prohibited from filing a bankruptcy again within the period that your car is financed, you may be unable to seek relief from your car loan if you are again saddled with financial difficulties.
Sometimes the car finance company will permit you to save your car simply by indicating that you are electing to keep your car and continue making payments. The specifics of your situation may dictate whether it is better to execute a formal reaffirmation agreement or simply continue making payments and keep the car. The reaffirmation agreement will save your car from efforts by the finance company to repossess it as long as you do not fall behind on your payments. While you may be able to proceed without signing a formal reaffirmation agreement, failing to do so might leave you exposed to potential involuntary surrender of your car by the finance company. If you do not formally reaffirm the obligation and cannot continue to make the payments after your bankruptcy discharge, however, we may be able to argue that the loan was discharged.
While bankruptcy can be help you save your car if you are facing repossession of your vehicle, there are many issues that need to be considered both in terms of whether to keep the vehicle and the best approach to keeping your vehicle. Our experienced Arizona bankruptcy attorneys at Stone Rose Law can carefully evaluate your situation so that we can advise you on the best approach to saving your car. Our Scottsdale bankruptcy law firm has helped people throughout Arizona keep their car.