Are you way behind on your auto payments? If you are, it can be scary. You can receive harassing phone calls from the auto creditor threatening to repossess the vehicle and you can be left without transportation. Fortunately, Nebraska bankruptcy law lets you stop the repo and keep your car. And, you have choices. Filing for bankruptcy in Nebraska can be done two different ways, in either a Chapter 7, or, a Chapter 13 bankruptcy.
Step One: File Bankruptcy
The first step is to file bankruptcy. Filing bankruptcy in Nebraska stops the creditor and the repo agent in their tracks. This is what is known as the “automatic stay.” Think of it as big red stop sign for the creditor. They can no longer call and threaten, they can’t write nasty letters, and your property is protected by law. The repo man is stopped from repossessing the car from off the street, a public parking lot, or from your driveway at night, without you knowing it.
File a Chapter 7 in Nebraska and Pay Just What the Vehicle is Worth, in One Lump Sum
There are two requirements to keep your vehicle during a Chapter 7 when you are behind on the payments. First, you would have to file a motion in Bankruptcy Court for approval to only pay the vehicle’s current value, not the full balance owed. Speed is key-it’s best to file that motion before the creditor requests permission from the court to repossess. Second, you would pay a lump sum during the bankruptcy. You have to pay what the vehicle is worth, but you don’t have to pay the full amount owed on the loan, the interest, or the late fees.
Ways to make the payment:
1. Tax refund, private loan from family or friends, or a new bank loan.
2. If it is a “newer” car, you may qualify for a loan from a special bankruptcy finance company. How to qualify:
- The vehicle must be less than 10 years old
- The vehicle must have less than 150,000 miles on it
- You must meet specific income to loan ratio guidelines
File a Chapter 13 in Nebraska and Pay Lower Interest or What Your Vehicle is Worth, Over Time.
If the lump sum payment in Chapter 7 just won’t work, don’t despair. Filing a Chapter 13 lets you change the terms of the auto loan, and pay it back over a longer period of time. The payment plan can be extended from 3 to 5 years, the interest rate can be reduced to the current Chapter 13 rate of 5.25%, and your payments can be lowered. If the loan is over 2 ½ years old, you can pay the actual value of the car over 3 to 5 years, not the amount owed on the loan.
Put Your Trust in Our Nebraska Bankruptcy Attorneys
Don’t Wait!! We can help you find an option that is right for you, and protect your vehicle. At Steffens Law Office we have over 50 years of experience in bankruptcy law. For more information, call us at 308-872-8327, today. You can also email our Nebraska bankruptcy attorneys directly at [email protected]