Someone told me that I can file a Chapter 7 and get a new car loan for the value of my car instead of paying back my current loan balance
There is a program known as redemption. Redemption is a great option for a lot a people after a bankruptcy. A usual situation is that a Debtor is filing a Chapter 7 and owes way more on their car than the car is really worth. The Debtor wants to keep the car even after filing for bankruptcy because they need it as their means of transportation to and from work or other obligations.
After filing a Chapter 7 lenders do normally let you keep your vehicle but they demand and impose full payment on the current loan under what is known as a reaffirmation agreement. Typically you are left with the option to keep your existing car loan and continue making the high monthly payments until the loan is paid in full, or to give back the vehicle leaving you no means of transportation. However, there is now a better option. The redemption program allows you to take advantage of a better choice to keep your car by paying only the fair market value to the creditor rather than the amount that you actually owe. This then results in lower monthly payments, fewer payments and a fresh start with a major bank as a way to help rebuild your credit.
How does this work? 722redemption has minimum requirements:
- Vehicle must be less than 10 years old
- Vehicle must have less than 150,000 miles
- Debt ratio: All remaining debt payments divided by the gross income cannot exceed 45%.
If you meet these basic guidelines you may be able to work with your attorney, your creditor and 722redemption. If qualified and approved, 722redemption will supply a lump sum necessary for your to redeem your vehicle. In addition, the attorney’s fees associated with the Order to Redeem can be financed as part of your redemption loan. Redemption offers clients a way to immediately begin to save money and re-establish credit.
If redemption is not an option, you may also qualify for a loan to replace your vehicle meaning that you can surrender your vehicle, discharge the loan through the bankruptcy and purchase a new vehicle with a loan through a major national bank which will help to rebuild your credit while having lower payments.