Car finance: and going bankrupt |
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Car finance: and going bankrupt Filing for Chapter 7 bankruptcy may allow the debtor to decrease the price of his current car. Oftentimes debtors have automobiles that are worth significantly less than the balance owed to the lender. Having a car that is worth only $10,000 and having a due-balance of $18,000 is not that uncommon. In a Chapter 7 bankruptcy the debtor has choices of either returning the car back to the lender and not being liable for the $18,000, reaffirming the debt and continue to pay out the $18,000, or negotiate with the lender for a reduction of the amount owed. The lenders are well aware that the borrower may return the $10,000 car, without the lenders ever seeing a dollar of the $18,000 payment, leaving the lenders with the extra expense of selling the car. The lenders often times are willing to negotiate with the debtors to reduce the balance for their car. Accepting $14,000 for the $18,000 of the balance owed appears much better to the lender than just getting the $10,000 car. However, lenders also have some leverage. They are well aware that debtors have bad credit history after bankruptcy and will have hard time getting a car loan at a reasonable interest rate. Therefore, lenders are not always willing to negotiate for significant decrease in the balance owed. In those cases the debtors should realize that they do have options, and are not necessarily stuck with paying for the $10,000 car that is costing them $18,000. ICar finance: and going bankruptf the car is really worth $10,000 the debtor might be better of returning the car to the lender. A car-loan after bankruptcy will have a high interest rate; however the cost of having a high interest rate on another $10,000 car might be significantly lower than $18,000. Furthermore, the debtor can have a co-signer on the loan for the purchased car. A co-signer with a good credit history will allow the debtor to get a lower interest rate. Having assets after bankruptcy may also allow the debtor to put up more collateral for an auto loan, decreasing the interest rate. For more information about Car-Loans in bankruptcy, visit the popular blog at http://newinfopost.com/bankruptcy/car-loans Article Source: http://EzineArticles.com/?expert=David_M_SiegelCar finance: and going bankrupt |
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