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A bankruptcy filing can help you discharge debt from old repossessions of cars, motorcycles, boats, golf carts, etc. Regardless of whether you voluntarily surrendered the collateral or if it was an involuntary repossession, the result is the same – there is an unpaid balance or deficiency that remains and it is a negative mark on your credit report. That makes financing a vehicle difficult or impossible for you. The difference between being able to finance a vehicle purchase at a reasonable interest rate and a high interest rate is huge.
Many people are unable to buy a vehicle for cash outright. A vehicle loses about 10% of its value the minute you drive it off the lot. Lender can charge thousands to repossess, store and resell a vehicle. So, when a job loss or illness disrupts your ability to pay a car loan, and it gets repossessed, more often than not, you will owe more on the loan than what the car is worth. With the added fees and costs, it is not uncommon to see some people owe about as much on a car loan after repossession and sale as they did when they still had the car.
Also, it is quite common for car lenders to want a co-signer when the primary borrower is young, does not have credit history, or has bad credit history. Many of our clients are on the hook because they co-signed for a family member or friend who defaulted on the loan. Both signers are usually both fully and independently liable for a car loan.
Repossession deficiencies may be discharged in Chapter 7 or Chapter 13.