New Bankruptcy Law Secrets
Keeping Your Car
If you wish to keep
your home or car you must continue to make payments.
One special note here. While it's generally safe to contact a creditor before you file
your bankruptcy in an attempt to negotiate a reduction in your debt, never do this with a
leased car debt.
While the automatic stay that's issued at the start of the bankruptcy process is supposed to legally bar creditors and the collection agents they employ from taking any action to collect on your debts, the auto industry is in a special situation.
If your lessor becomes aware of your financial problems, they will assume you've lost your source of income. Their fear is that you will stop making your lease payments and vanish with their wheels. In our modern culture not having a car can be a very serious problem, hence our deep need to retain our means of transportation. Cars are mobile - unlike houses or land.
When a lessor becomes aware of your financial situation, they may tell you they want to work with you. They may tell you anything you want to hear. But don't be surprised if you get the knock on the door in the wee hours of the morning only to find a tow truck attached to your beloved vehicle.
If you go ahead and file, don't be surprised if your lessor goes to the court for permission to grab their wheels.
Ask
your lawyer about one small point. In some states the bad news of your filing may not be
entered into your credit file for 10 days or longer. If you have resigned yourself to
losing your car, a quick trip to the used car lot may be in order. There you can either
buy a more humble car for cash (how about a nice Gremlin or a Vega?) or one with payments
you can afford later.
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