There are two very common problems that my clients have: unmanageable medical bills, and car problems. It makes perfect sense, many Americans are living paycheck to paycheck in today’s economy, and medical bills or car problems can come out of the blue, completely unexpected to throw your family budget into a downward spiral.
Cars can be just as essential as medical care for people in Utah. While Salt Lake City has an excellent public transportation system, for some people that live in the suburbs or rural areas of Utah, public transportation is not an option, they need a car to get to their job, because if they can’t get to work, they can’t earn money, and they can’t afford essentials such as food, shelter, and clothing – let alone extras like telephone service, christmas gifts, and date nights.
There is one thing you may be able to do to fix your car situation when filing for Chapter 7 bankruptcy. If your car is not paid off, and it breaks down, throwing you into financial chaos, you could just let it go. The legal term for this is “surrender”. You can simply surrender the car to the lien holder, and stop your monthly payments. You do not have to keep a broken-down car and try to figure out how to pay for repairs and car payments, you can just start over. After all, any Utah bankruptcy attorney will tell you that “starting over” is what Chapter 7 bankruptcy is all about.
I can promise you, based on personal experience with my clients, that offers for car loans will be some of the first mail you receive after filing for Chapter 7 bankruptcy with an attorney. One former client counted over a dozen credit offers within a week or so after filing her chapter 7 bankruptcy petition, and most of them were offers for car loans. Another former client was able to finance a new car on the same day that her bankruptcy petition was filed. As long as the creditor can verify the time at which your petition was filed, any loans entered into after that time are post-petition loans that won’t scare creditors in the least.
In fact, creditors love to loan to people what have just filed bankruptcy, and there is a good reason for that: they know that because you have just filed for Chapter 7 bankruptcy, you won’t be able to do it again for 8 years – so they have a good chance of recovering their money.
The down side, of course, is that these credit offers will come with very high interest rates. It is important that you mind your budget after filing bankruptcy, because you will not be able to have a second bite at the bankruptcy apple for years to come. If you mess up, you’re stuck!
For that reason, this solution is not for everyone. It can be risky, and will definitely carry a very high interest cost. But if you find yourself stuck between a rock and a hard place (as my clients often do) with a broken down automobile, and you don’t know how you’re going to pay for auto repairs and car loans, on top of all the other bills you have piling up; then it could be a worthwhile move for you to surrender the car and start over.
Koehler Bankruptcy PLLC is a law firm that helps people like you fix their financial problems. If you need help, don’t suffer a minute longer – call us for a free consultation at 801.200.3795.