Posted on Nov 03, 2012

According to National Public Radio, repossessions are up 10% this year. There are so many repossessions, the lenders are more willing to work with people to stay in the vehicles, rather than have them repossessed and auctioned. If you are facing a repossession, try to work with the lender. If you can’t, and the vehicle is repossessed, the lender or finance company may auction it, and file a lawsuit against you for the difference, called the “repossession deficiency” or just the deficiency.

Rather than let that happen, if you are working and otherwise qualify for Chapter 13, you may be able to file Chapter 13 and basically “refinance” the vehicle over a 3 to 5 year plan. It is often possible to lower your interest rate on the vehicle. And, if you’ve owned it more than 2.5 years, or in certain other circumstances, you may only have to pay back the value of the vehicle in full, with the “upside down” part or “negative equity” in the vehicle paid little, if anything. Or if you aren’t working or otherwise don’t want the vehicle, you can let them auction it and later file Chapter 7 bankruptcy to discharge or cancel the remaining deficiency.

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