Cramming down car loans

Everyone knows that a car depreciates immediately after you drive it off the lot.  What if you could use a bankruptcy to modify your car loan by reducing the principal, interest and/or duration?  Would that make your life easier?

If you have a car loan and want to keep the car, one way is to keep paying the contractual payment.  So if your existing car loan has you paying $500 a month for 48 months, you could continue to make those payments and keep the car.  The car lender receives all of their contractually promised payments.

If the contractual payments are unfeasible or the terms are bad (high interest or high payments), you can always reduce the interest rate and extend the loan (currently 4.75% and 60 months) in a chapter 13 bankruptcy.  For example, lets say you have a car loan with a balance of $15,000, 20% interest and 3-year term.  This would result in a monthly payment of $557.  If you were to modify that loan in a chapter 13 bankruptcy to 4.75% and 5 years, you would end up with payments of $281 a month for 5 years.  In some situations, you can also reduce the principal of the loan down to the blue book value of the car, which, combined with the above rate and duration adjustments, can lead to significant savings.  How much savings?  Schedule a consultation and we can figure that number out for you.

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