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Is ownership of a car protected in Chapter 13 bankruptcy?

When New Jersey consumers experience financial difficulties with no indication that their circumstances will improve shortly, they may consider filing for bankruptcy. However, those who cannot do without their cars may be concerned about the possibility of having to give it up if they file for Chapter 13 bankruptcies. Except under a few circumstances, consumers may be allowed to keep at least one vehicle.

One of the ways in which the U.S. Bankruptcy Code protects consumers is the automatic stays that become effective upon the filing for bankruptcies. Consumers who have fallen behind in their auto payments can rest assured that any repossession action against them will stop. Even if an auto loan company repossessed a consumer's car shortly before he or she filed for bankruptcy, an experienced bankruptcy attorney might be able to get it back.

However, if the equity on the vehicle is above a certain level, or if the consumer has a luxury vehicle with very high payments, the bankruptcy court may decide to seize the car. Chapter 13 allows a person to reorganize debt payments over an extended period of three to five years according to a court-approved payment plan. Therefore, if the person can continue paying the installments, ownership of the car will likely be safe.

Financial problems can adversely affect New Jersey families, and rather than spending months of trying all kinds of remedies suggested by others, it may be more appropriate to seek legal advice. Although it is true that each consumer's circumstances are unique, a seasoned attorney has likely dealt with similar situations. With the information and advice provided by a skilled lawyer, informed choices can be made, and if filing for Chapter 13 bankruptcy is the choice, an attorney will provide support and guidance throughout the process.

Source: autocreditexpress.com, "Can You Keep Your Vehicle in a Chapter 13 Bankruptcy?", Nov. 5, 2016

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