Yes, in fact there is such a chance. This option is possible when you file a Missouri Chapter 13. It give you a chance (under certain circumstances) to drop the balance of your car loan while at the same time lower your interest rate.
A St. Louis Chapter 13 bankruptcy is described as a repayment plan over the course of three to five years in which certain creditors are paid back. This would include any car loans that you might have (unless of course you’d rather surrender the car, in which case you could hand the car back and get out from underneath the debt completely). The loan is spread out over a period of years, and the court allows for a defined interest rate to be used. This rate of interest is usually set at about 5-6%, which can be substantially lower than interest rates that some people are dealing with (rates as high as 17-18%, or higher). With lower rates spread out of a number of years, you could end up shaving off a couple thousand off of the total owed.
The other bonus of a Chapter 13 is the possibility of cutting several thousand off the balance of your loan altogether. This is described as ‘cramming down,’ wherein you end up owing not the current amount owed on your loan, but rather the actual fair market value of the car. This option becomes possible with what is called a ‘910 car’. A 910 car is an automobile that you purchased nine hundred and ten days ago or more (which works out to be about two and a half years). So let’s say you have a car or truck that you bought in early 2009, and you still owe $15,000. But the actual value of the car in question (taking into consideration Blue Book or NADA values, and the physical condition of the car) is closer to $7,000. In this type of scenario, the amount that you would pay back inside the Chapter 13 plan would be the lesser of the two. This obviously cuts that amount owed to the creditor in half (and again, spread out over a period of between three to five years in length).
Unfortunately, this option is not available in a St. Louis Chapter 7 bankruptcy. In this type of filing, if you wish to keep your car or truck, you would simply reaffirm the debt with the creditor on the existing terms (current balance and interest rate). Although the Missouri Chapter 7 does have its perks, including a straight discharge of unsecured debt (like credit cards, medical bills, payday loans, etc.), and being done from start to finish in about four (4) months.
The affordable St. Louis bankruptcy attorneys at The Law Office of Jennifer Alter-Rieken have been providing expert bankruptcy legal services for years. Our goal is to get you the fresh start / clean slate you deserve, and set you on the path towards financial freedom.