Welcome to Bankruptcy Guide
Bankruptcy Loan Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Figuring the Value of Your Bankruptcy Car Loan
from:Most people have a car loan when they file bankruptcy, so the old and new bankruptcy laws address loans on vehicles. Unfortunately, the new laws are tougher on debtors in terms of how much you must repay on your outstanding loan. This forces the debtor to pay the full amount for loans that even have excessive interest rates.
Under the old bankruptcy laws, debtors only had to repay the value of the vehicle they owned. That meant you only had to pay back the current resale value and not the retail value of the vehicle. Under the new law, if you have had a loan placed on the car within the last 3 years, you will have to pay the full amount of the loan.
This is one of the most significant changes in the new bankruptcy law. Under the old law, the courts would have determined the real value of the car and then figured up what you had paid to date and what you would owe in payments to reimburse to that value. Under the new law, you have to pay the full amount or lose the car.
This means that if you took out a loan at a high interest rate, you will still have to pay back the full loan. In effect, you are paying 2 or 3 times what the car is worth. This law change made it most difficult on those who had to accept less than desirable car loans in order to obtain a vehicle. Of course, under a chapter 7, you can surrender the car if you simply cannot afford to make the payments. But once again, that makes it difficult to recover from a bankruptcy when you have no car to drive. Under a chapter 13, the car loan payment is included in your repayment plan.
Speaking of bankruptcy car loans, you will probably be inundated with car loan offers once your bankruptcy is discharged. You won’t ask for the information, but plenty will show up in your mailbox. Auto dealers know many people surrender their cars and need a vehicle, and so they track bankruptcy court records to find out who has filed. The letters claim to want to help you rebuild your credit, but you must be very careful. Odds are the car loan will be charged a premium interest rate because of your credit rating.
The good news is that if you can afford to buy a car, and don’t have one, the bankruptcy will not stop you from finding interested lenders. It’s important to remember though that you don’t want to start creating new debt that you cannot afford to pay. You cannot file another chapter 7 for 8 years or a chapter 13 for 4 years. New creditors see themselves as first in line again in terms of collection status.
Bankruptcy Loan News
Why do I owe $16K on settled SBA loan?
Dear Bankruptcy Adviser,I owned a business that closed nearly three years ago. I settled with the Small Business Administration, or SBA, on a loan that I got to start the business. But recently, I was ...
Read more...Grads declare bankruptcy under mountain of student loan debt
Just as college seniors prepare to graduate, experts are warning about an alarming new trend. More students are declaring bankruptcy to help get out from under a mountain of student loan debt. “We are starting to see the first big wave,” says Christina Henry, a bankruptcy attorney at Seattle Debt Law. Henry said she has seen a notable increase recently in clients coming to her with student loan ...
Read more...ResCap Gets Interim Approval for $1.45 Billion Bankruptcy Loan
Residential Capital LLC, the bankrupt mortgage company indirectly owned by the U.S. government, won interim approval to borrow $1.45 billion to help fund the company’s operations.
Read more...Houghton Mifflin Harcourt Publishing Files for Bankruptcy
Houghton Mifflin Harcourt Publishing Co., the publisher of authors from Mark Twain to J.R.R. Tolkien, sought bankruptcy protection to eliminate more than $3 billion in debt.
Read more...Bankruptcy court approves Delta DIP loan to Pinnacle
A US bankruptcy court approved Delta Air Lines’ (DL) $74.3 million in debtor-in-possession (DIP) financing for Pinnacle Airlines Corp., a significant provider of regional service for DL.
Read more...Record number of school districts in state face bankruptcy
Pummeled by relentless budget cuts, a record number of California school districts are facing bankruptcy, state Supt. of Public Instruction Tom Torlakson announced Monday. The Inglewood Unified School District and 11 others -– most in northern California -- are currently...
Read more...The Lean Years: Filling In Outlines Of Linda McMahon's Oft-Cited Bankruptcy
In her campaign narrative, multimillionaire U.S. Senatecandidate Linda McMahon has often invoked the hardship of losing her home and filing for bankruptcy more than 35 years ago.
Read more...Contour Med Files Chapter 11 Bankruptcy
Contour Med Inc. of Little Rock filed for chapter 11 bankruptcy reorganization on May 11 and needed an emergency loan of $40,000 just to keep its doors open.
Read more...