Can You Lower Your Car Payment By Filing Chapter 13 Bankruptcy?

When you purchased your vehicle through financing, you may have had a less than perfect credit score, or no credit at all. Your low credit score will most likely have meant the lender offered you a sub-prime loan (i.e. a high interest loan) as people with low or no credit are judged to be more likely to default on their payments. The high interest rate protects the lenders money, forces up your monthly payments, and makes you pay much more than the value of your car.

Once you are tied in to a sub-prime auto loan, those high interest rates and high monthly payments make it very easy to fall a couple payments behind and so become delinquent. In recent months the auto loan industry has seen growing rates of sub-prime and deep sub-prime auto loans, as well as an increase in auto loans that are at least 60 days’ delinquent.

“The average amount owed on the loans 60 days past due was $737 to $3,042, depending on the credit score.”

“Earlier this month Experian Automotive, which tracks the new and used-car finance industry, reported that 20.8% of auto loans are now held by consumers with subprime or deep subprime credit scores -- defined by FICO scores of between 300 and 620.”

Having a reliable form of transportation is necessary to maintain employment, to care for yourself and your family. If you’re stuck with a sub-prime auto loan and constantly struggling to make your payment, or you’ve fallen behind and are constantly worried about your car being repossessed, a Chapter 13 bankruptcy might offer you the relief you’re looking for.

Lowered Interest Rates – If you have a subprime auto loan, we can lower your interest rate. The current interest rate in the Eastern District of Missouri is 4.75%. Simply lowering your interest rate can save you money every month and can save you thousands of dollars over the life of the loan.

Reduced Balance – If your loan is more than 910 days old, we may be able to reduce the balance to the fair market value of the vehicle. We can still also lower your interest rate.

Low Fees To Get Filed – Often we can file your case for an amount similar to your current car payment. Although there are additional attorney fees, you do not pay these directly. Rather, they are paid through your Chapter 13 Plan.

Chapter 13 – Explained. Click here for a link to a more detailed explanation of Chapter 13 Bankruptcy. Remember that although a Chapter 13 is a repayment, it does not mean that you are repaying all of your debt. Chapter 13 payments are usually affordable and protect you from all of your debts.