Car Loan Payments

Massachusetts Bankruptcy Lawyers Anthony Bucacci and Robert Simonian (508)673-9500


Can Bankruptcy Eliminate a Car Loan Deficiency After Repossession?

If your car is repossessed, you could be responsible for paying back a deficiency. Learn how to get rid of a deficiency by filing for Chapter 7 or 13 bankruptcy.

When you can’t afford to make your car payment, the lender has the right to recover the vehicle, sell it at auction, and apply the sales proceeds to the loan. Sometimes the auction amount isn’t sufficient to cover the entire balance you owe, leaving a “deficiency.” In this article, you’ll learn:

  • whether you’re responsible for paying a repossession deficiency balance
  • the steps the lender must take to collect the deficiency balance, and
  • how you can get rid of a car loan deficiency in bankruptcy.

Learn more about your car in bankruptcy or how to avoid repossession.

Car Loan Deficiencies After Repossession

When you take out a car loan, you’re liable for paying back the loan, but you also agree to give the lender a lien allowing the lender to repossess the vehicle if you stop making your payments. If you default on your car loan, your lender will repossess your car and sell it at a public auction to satisfy its loan (as well as any fees incurred during repossession).

Because cars tend to depreciate quickly, in many cases, the sale proceeds from the auction might not be enough to pay off the outstanding loan balance and fees. If that happens, the unpaid balance is called a deficiency.

Learn how to keep a car in Chapter 7 bankruptcy or how to get your car back after repossession using Chapter 13.

Car Lenders Can Collect a Deficiency After Repossession

In most states, your car lender can come after you to collect its deficiency balance. The lender is limited to asking you to pay the deficiency without first doing more. If, however, your lender sues you in court and obtains a deficiency judgment against you, the lender can start garnishing your wages or placing liens on your other assets.

Bankruptcy Can Eliminate a Deficiency After Repossession

If your lender is suing you for a deficiency balance, filing for bankruptcy relief can stop the lawsuit. A Chapter 7 or Chapter 13 bankruptcy discharge can eliminate your responsibility to pay back a car loan deficiency. When possible, it’s best to file for bankruptcy soon after receiving notice of the suit and before the time to respond elapses. Here’s how it works.

After filing, the automatic stay prevents your lender from moving forward with collection activities, including its deficiency lawsuit against you. However, if your lender has already obtained a judgment and placed a lien on other property (such as your house), you’ll need to file a bankruptcy motion to remove the lien.

Source : alllaw.com


12 Reasons For Filing a Chapter 13 Bankruptcy

Reasons For Filing a Chapter 13 Bankruptcy1. There is a lot more flexibility when you file a chapter 13 bankruptcy. You can dismiss the case voluntarily at any time or convert it to chapter 7 bankruptcy at any time. You can modify your plan if your income changes if income changes or you decide to give up a house or a car. You can refinance or sell a house during the plan.

2. A chapter 13 bankruptcy can stop or prevent a foreclosure when you are behind on mortgage payments. You will have to pay the past due payments and continue paying the regular monthly payments going forward.

3. You can strip off and remove a second mortgage, reduce the mortgage balance of an investment or multifamily home and you can reduce the loan balance of an automobile loan.

4. More debts can be discharged in a chapter 13 bankruptcy as opposed to a chapter 7 bankruptcy such as alimony and divorce payments and money owed for malicious and willful acts.

5. Attorney’s fees can be incorporated into the bankruptcy plan. You will not have to come up with a lot of money at first and usually the attorney’s fees only reduce what the creditors receive and do not increase your payment.

6. You do not have to reaffirm an automobile loan in order to keep a car.

7. You can solve a tax problem in a chapter 13 bankruptcy and pay back at a rate that you can afford and stop tax levies.

8. You can solve a child support arrears problem in a chapter 13 bankruptcy and pay the past due amount over time, usually 36 to 60 months.

9. You can protect property that is not exempt in a chapter 7 bankruptcy and keep everything you own.

10. If an automobile loan payment is too high, you can stretch out your loan balance over 36 to 60 months and lower your monthly payment.

11. If you have filed a chapter 7 bankruptcy within the last 8 years and are not eligible to file another one until 8 years have passed you can file a chapter 13 bankruptcy and make a small monthly payment and still receive a discharge from you new debts.

12. You can protect a co-debtor from collection activity while the chapter 13 bankruptcy is pending.

This is not an exhaustive list of reasons where a chapter 13 bankruptcy may be a better choice over a chapter 7 bankruptcy. You should consult with an experienced bankruptcy attorney for a full evaluation of your case.

Car Title Loans & Bankruptcy

A car title loan is when you borrow money and offer your car as collateral, and if you default, the lender can repossess your car. Exactly how much you may borrow and how quickly you need to repay the loan depends on your loan contract and the value and equity in your car. The lender may be able to take your car and sell it, keeping the difference between what you owed on the loan and the sale price. If the vehicle sells for less than what is owed you can still be in debt to the lender. If that were to happen you could discharge the debt in bankruptcy whether it is chapter 7 bankruptcy or chapter 13 bankruptcy. What the lender is permitted to do is dependent on state law and some states don’t allow vehicle title loans at all.

Note that you will most likely need to pay back a lot more than what you borrow. Hi interest rates and the cost of borrowing the money, means these are usually very expensive loans. The Federal Trade Commission says lenders often charge a title loan APR of 300%. Some states cap APRs for vehicle title loans, but the Consumer Financial Protection Bureau extended its deadline for putting new protections into place for borrowers who take on vehicle title and other high-cost installment loans. It has proposed rolling back requirements for lenders to determine upfront if borrowers could afford to repay the loans. Often people in desperate situations will try to obtain such a loan before filing bankruptcy.

What is a car title? A car title is an official, state-issued document that says who owns the vehicle. It will list the owner’s name and the car’s year, make, model and the vehicle identification number or “VIN Number.” Every time the car has a new owner and every time the owner moves to a new state, the title will change. Vehicle title loan lenders will often require a “clear” title, meaning you own your car outright and free and clear of other liens or loans against the vehicle.

What if you don’t own your car outright? It may be harder to get a vehicle title loan or you may not be able to borrow as much money as you may need, or you may not be able to get a car title loan at all if you already have a loan on your car, depending on your state’s laws. You technically don’t own the car, the lender does. Depending on your state’s law, you may not even have a title in-hand, the lender may have it. If you do have the title and still owe on your car, it will say there is a lien on your car. This makes in more difficult to obtain such a loan.

The Benefits of a Car Title Loan

Car title loans are loans of last resort. It’s possible that a bank or credit union will offer car title loans at lower rates than storefront lenders.

Easier to Qualify

Because the lender knows it has something of value to take (your car) if you don’t pay it back, it is likely to have more relaxed credit score and income requirements than those for other types of loans. However, your state might impose certain income or other requirements. Again, a title loan should be a last resort for an emergency situation. If you are considering such a loan you should consult with a bankruptcy attorney first to explore other options.

Greater Loan Amount

Depending on how much your car is worth, you may be able to borrow a greater amount than a payday loan, which is another type of installment loan that uses your paycheck as collateral instead of a car title. Most auto title loans are for 25% to 50% of the car’s value, usually between $100.00 and $5,500.00 though some lenders may offer as much as $10,000 or more.

• How do you know how much your car is worth? Lenders will use industry standards like NADA or Kelly Blue Book to look up how much your car is worth. Do not expect that they will use the high retail value but rather the wholesale or trade in value. They will usually offer you less than this amount so that if you don’t pay back the loan and they take your car, they can then sell it for a profit. You can use the same online industry guide for free to get an idea of the amount you could borrow.

The Drawbacks of a Car Title Loan

We can’t emphasize this enough that vehicle title loans are expensive, more expensive than nearly any other type of credit and potentially risky. If you live in Massachusetts and are considering such a loan it may be best to schedule a free consultation with a debt lawyer or bankruptcy attorney before you make a mistake.

A Cycle of Debt

Lenders for car title loans make more money if borrowers stay in debt. In addition to high APRs, title lenders often charge fees or costs. If you cannot repay the loan, a “rollover” loan would fold all of those costs into a new loan. What sounds like a plus really isn’t because the new loan would add more fees and interest, making it even more difficult to get out of debt. CFPB data suggest that’s exactly what happens as a significant number of vehicle title loan borrowers enter multiple rollover loans and the cycle of debt begins.

You Could Lose Your Car

Default on your car title loan and the lender could repossess and sell your car. To add insult to injury, you may even be charged a repossession fee and auction fees. Some lenders require borrowers to furnish them an extra set of keys or install a device that could impair your ability to start the engine if you do not make payments. These devices may be used for repossession or as a way to remind borrowers to pay their loans on time. When the CFPB studied vehicle title loan borrowers between 2010 and 2013, 1 in 5 or 20% had their vehicle seized or repossessed.

If you find yourself in a situation where you are in debt and desperate for money to keep up with your bills it may benefit you to speak with us. We are Massachusetts bankruptcy attorneys serving all of Bristol County Massachusetts and Plymouth County Massachusetts. Attorneys Anthony Bucacci and Robert Simonian are Massachusetts bankruptcy lawyers helping people file bankruptcy in all of Massachusetts and particularly Southeastern Massachusetts including Fall River, Seekonk, Swansea, Freetown, Westport, Somerset, New Bedford, Dartmouth, Assonet, Fairhaven, Assonet, Mattapoisett, Middleboro, Lakeville, Raynham, Attleboro. Call us today or visit our website today to schedule a free consultation.

Rebuilding Your Credit After Bankruptcy

REBUILDING YOUR CREDIT AFTER BANKRUPTCY

Rebuilding Your Credit After BankruptcyThe most frequently ask question from our clients is “rebuilding my credit after bankruptcy?”

Chances are, that if you have made the decision to file a bankruptcy, you are at a point where some or all of your debts are behind, you receive collection notices or even law suits. At that point you probably have been making ends meet somehow without using your cards.

When you can’t obtain new credit with high debts you have to do something.  This will prevent a creditor from granting you a new card or a loan unless you take action.  Rebuilding your credit becomes necessary in order to move forward in life.

You have now made the decision to obtain debt relief by hiring an attorney to file a bankruptcy.  After you can begin rebuilding your credit with a bankruptcy discharge in hand.

Your attorney takes you through the process of filing bankruptcy and then, afterwards, the weight of those collection letters, collection call and law suits is gone.

After bankruptcy, there are many avenues to obtain new credit. First and foremost, when a bankruptcy is filed the person that filed can decide to keep a car with automobile loan or a house and a mortgage.  Secondly, reaffirmation of those debts allows a bankruptcy filer to get on track immediately. Thirdly, the banks will record your mortgage payments to the credit bureaus. Once the attorney discusses reaffirmation of debts advice can be given accordingly.  Attorneys will explain the process.

What if you do not have a car loan or mortgage to reestablish yourself?

Without any debt many credit card companies are willing to grant you a fresh start. Credit card companies offer decent credit limits.  Favorable credit reporting usually increases credit limits and credit offers.  Offers of new credit from credit card companies listed in the bankruptcy often surprise clients and then clients receive new credit.

Open a secured credit card.  As a result, this will help to improve your credit. Deposit money in a bank account that issues you a secured card based upon the amount of your deposit. Lenders report timely payments and payment history to the credit bureaus.

In a short amount of time credit scores will improve.  Lenders and credit card companies will extend credit.

It is not unusual for clients to obtain automobile loan months after bankruptcy.  A mortgage is the most difficult type of credit to obtain after bankruptcy.  Usually one to two years after a bankruptcy you can obtain a mortgage.

These are some techniques to obtain the fresh start you deserve and there are many resources available.

Mortgage Relief and Foreclosure Prevention

There will be a great need for mortgage relief and foreclosure prevention in Massachusetts and the entire country.  The CFPB stated today “we are at really an unusual point in history”.  Nobody has ever before seen this many mortgages in forbearance at one time that are expected to exit forbearance all at one time.”

This may be the calm before the storm. If mortgage companies don’t get it right when all these forbearance periods end.

With stimulus money and no federal student loan payments, people have been able to firm up their finances. People are paying off car loans, clearing off credit card debts or other old debt. Many are actually establishing a savings account for the first time in a long while.

What Mortgage Relief and Foreclosure Prevention is Expected

The CFPB hopes to have a plan to prevent a sharp rise in foreclosures this fall.  The present proposal would:

  • Establish a pre-foreclosure review period once forbearance ends
  • Delay the start of any Covid-related foreclosure to 2022
  • Provide mortgage servicers with streamlined loan modification options
  • Revise mortgage servicer communication rules to keep borrowers better informed.

Here is what to know.

The deadline for borrowers affected by Covid-19 to request or extend a forbearance plan is June 30.  This is also the end of a foreclosure moratorium on federally backed mortgages.  For borrowers who are behind in mortgage payments now, it’s imperative to act before June 30 to ask for a 180 day forbearance, and if needed, a second 180 day forbearance.  This will get you a year.  If that isn’t done, then the new CFPB rules would at least block servicers from filing a foreclosure lawsuit until after December 31, 2021.

The new rules if they are approved, will apply to all mortgages, not just those that are federally backed.

Certain fees such as late fees and stop payment fees would be waived.  If a loan modification were to include any catch up payments, servicers will not be allowed to charge extra fees or interest on those payments.  The new rules would be in effect until August 31, 2022 but may not apply to smaller lenders with less than 5,000 loans.

If you have the threat of a foreclosure, you can call us anytime or visit our website for more information.

Massachusetts Bankruptcy Hearing

You most likely will be asked the following questions by the Bankruptcy Trustee at your Massachusetts Bankruptcy Hearing creditors’ meeting:

  1. State your name
  2. Address where you reside
  3. If you own or rent the property where you reside
  4. You will be shown a document you have signed and you will be asked whether the signature is yours.
  5. You will be asked for a photo ID such as a driver’s license or passport or any government identification and another with your name and social security number on it, such as a medicare card, social security card or W-2 form. You may not use a tax return to prove your social security number.
  6. Have you read the bankruptcy petition and schedules and is everything contained in it true and accurate?
  7. Have you owned any real estate in the past 4 years?
  8. Why did you file bankruptcy? You may be asked why or how you accumulated the debt. The must usual answers are medical issues, loss of a job, loss of income, birth of a child, divorce, or simply an accumulation of debt that you simply can not pay anymore.
  9. Do you presently own any real estate? Has anybody put your name on their home like a parent or child or relative?
  10. You will be shown Schedule B of your petition and asked if the items listed represent all your assets, and if you have any other assets you forgot to list or would like to add.
  11. Does anyone owe you money?
  12. Do you have any personal injury claims or other claims that you could bring against anyone?
  13. Have you injured yourself in an accident in the past 3 years or have you consulted an attorney for any other reason other than bankruptcy in the last 3 years?
  14. Where do you work and do you have income from other sources?
  15. How much do you take home from your job every pay period?
  16. You will be asked about your income whether you receive Disability, Social Security, Workman’s’ compensation and how much.
  17. Will you receive and inheritance from a will or trust in the next 6 months or have you inherited anything in the recent past?
  18. If you have listed any secured debt such as a car loan or a mortgage you may be asked if you are going to keep the car or house.
  19. Did you receive an income tax refund? How much did you receive or will you receive?
  20. Have you given away anything worth $1,000.00 or more to anyone in the past 2 years?
  21. Have you given any money to family members or friends in the last year or repaid any loans to family or friends?

The above is a list of the most common but not necessarily all the questions that will be asked at Massachusetts Bankruptcy Hearing. The most important advice is to answer all questions truthfully, honestly and briefly.

The hearing will be conducted by a lawyer acting as a Trustee on behalf of your creditors.  As your bankruptcy attorney, I will be in sitting with you and you will not be alone as it is usually the most important step in the process.  There are some very informative videos about the entire bankruptcy process.

There almost always are no creditors present and the entire matter will take no longer than 5 minutes or so.  We try to send any and all information that would be needed ahead of time so that your hearing goes quickly and smoothly.

Here is a video of a typical bankruptcy hearing:

Top 10 Questions to Ask Your Bankruptcy Attorney

What Are The Top Ten Questions To Ask Your Bankruptcy Lawyer ?

If you are thinking about filing for bankruptcy, you will want to ask your bankruptcy lawyer a few questions. Before you make a final decision regarding your bankruptcy, it is important to get the answers you need.  Asking a knowledgeable and informed bankruptcy attorney is a good place to start.


  • What type of case will I be able to file?

There are two main chapters of consumer cases, a Chapter 13 bankruptcy and a Chapter 7 bankruptcy. Both types of cases will reduce or eliminate debt, but there are some differences.


  • How is the chapter of the bankruptcy case I file determined?

There is a complex mathematical computation that must be performed prior to a case being filed by an experienced bankruptcy attorney, and the result of this calculation determines whether you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.


  • What are the differences between bankruptcy chapters?

Once you know what chapter you are able to file, you will want to know how that type of case is different from the other.


  • Should I reaffirm a debt?

If you want to keep your house or your car, the lender will probably ask you to sign a reaffirmation agreement. These agreements are like new loans.   You will still be required to make payments after your case is finished.  It is very important that the consequences be explained to you for each individual case.


  • How long will my case take to be filed in court and when will my case be discharged?

Generally, once your chapter 7 case is filed the hearing will be scheduled approximately 4 weeks later and 60 days after the hearing you receive your discharge. From start to finish the whole process for a chapter 7 bankruptcy is approximately 90 days.


  • Can I file a case now if I have filed one in the past?

There are rules on how often you can file and what chapter you can file under, and if you have a previous case you need to know these rules.


  • What is the 341 hearing meeting of creditors?

This is the first time you will go to a hearing and in almost all cases is the only time as long as your attorney has prepared the case properly. We can put you at ease by letting you know exactly what will happen at this hearing.


  • How much does it cost to file a bankruptcy and do you have a payment plan?

Our costs are very competitive and considered low.  We offer payment plans to those who need it.


  • What happens if my chapter 13 case gets dismissed?

If your chapter 13 bankruptcy gets dismissed it is important to call your bankruptcy lawyer as soon as possible to discuss your options.  Delaying could limit your options.


  • Do I get to keep my property if I file bankruptcy, or do I have to return them to the lender?

In almost all cases all of your property and assets are protected and exempt.


We can provide you more details about bankruptcy so you feel comfortable with your choice to file a case.

For help getting out of debt, contact us today at 508-673-9500.  We will prepare for what comes before and after we file your case.

Common Myths About Filing Bankruptcy In Massachusetts

There are a lot of misunderstandings about filing for bankruptcy.  Credit consolidation companies can mislead people and credit card companies can mislead you so you continue paying high interest.  Many people rely on information that was true 25 years ago or from friends who have heard something from someone.  A lot of the information available on the internet is often very, very general and vague that it does not apply to over 95% of the cases and distorts the truth.

The following is a list of beliefs people have about filing bankruptcy that are SIMPLY NOT TRUE:

  • My Credit will be destroyed forever and I will never get credit again.
  • I will lose my house, my car and everything I own.
  • You can only have one automobile if you file bankruptcy.
  • If I have a car loan or a home mortgage I have to give up my car and home.
  • The whole world will know I filed for bankruptcy.
  • If you are married both husband and wife must file for bankruptcy.
  • Only bad people file for bankruptcy.
  • Filing for bankruptcy is too expensive and I can not afford a lawyer.
  • Even if I file bankruptcy I heard you have to pay everything back.
  • It is difficult to file for bankruptcy and they changed the laws to make it difficult.
  • I will never be able to own anything or have money in the bank after filing bankruptcy.
  • You can only file bankruptcy once in your lifetime.
  • You have to have some minimum amount of debt to file bankruptcy.
  • You can not discharge IRS taxes or State taxes in bankruptcy.
  • I will lose all of my future tax refunds.
  • I can be fired or lose my job if I file bankruptcy.

All of the above are common beliefs that people think are true about filing bankruptcy.  They are simply NOT TRUE.  It is important to speak to an experienced bankruptcy attorney for real answers to your questions.  It becomes very difficult to make a decision when you hear all kinds of information from unreliable sources.  We are available to accurately answer your questions and concerns anytime.