By: Jeena Cho

If you have fallen behind on your car payments and can’t afford to make up the missed payments, Chapter 13 may be a solution to keeping your car. Contrary to popular belief, bankruptcy is about restructuring your debt and helping you keep those secured property you can afford to keep.

Let’s take an example:
Suppose your monthly payment on a car is $500 and there is 30 payments left on it.
You are 3 months behind on your payment.
Current interest rate of 8%.

By filing for Chapter 13, we can restructure the debt as follows:

• Stretch out the payments to 60 months, hence reducing the monthly payments.
• Reduce the interest rate to approximately 4-5%.
• Make up the missed payments over the course of 60 months.

By filing for Chapter 13, it’s possible to reduce the monthly payment to less than $250 per month over 60 months, hence (hopefully) making the vehicle affordable.

If you are facing repossession of your car due to missed payments, or are struggling to make your monthly payments, call me for a confidential consultation at (415) 963-4004.

Disclaimer: Unfortunately, it is impossible to give legal advice over the internet, no matter how well researched or written. Before relying on any information I give, contact a lawyer to discuss your particular situation. I am a San Francisco bankruptcy attorney. The information given is based on California law.