Can you walkway from your Chapter 13 Bankruptcy payments without losing the two vehicles that i have?

Question

I filed chapter 13 bankruptcy 3 years ago. i am not able to make the payments on my bankruptcy, but i dont want to lose my two cars. I have about 24 payments left, but i am not able to obtain certain necessities for my kids because all of my money goes to bankruptcy. I want to walk away from it like everyone is walking away from their homes. I heard that you could walk away, but i always thought you had to pay every month, so they dont take your vehicles away from you.

Answer 1

You've been given some good advice and some not so good advice. You definitely need to speak to your bankruptcy attorney ASAP. Before you walk away from your trustee payments, there are a few things to consider.

The first thing that your attorney needs to consider is  your budget. Even though your Chapter 13 repayment plan has been confirmed by your Trustee and by the Court, there are options. Has your income decreased? Have your expenses increased? When you originally completed your schedules three years ago, you were paying less for food, shelter, and fuel.

Since you are still in your repayment period and have not been discharged, your schedules, budges, and plan can still be amended. If your trustee payment is too much for you to comfortably manage, your payment can be changed. Of course this will mean more paperwork, possibly another confirmation hearing, and maybe a creditor objection, but it's not outside the realm of possibility.

So, what will happen if you just walk away? There are a variety of scenarios and there are simple scenarios. If your car payments were delinquent when you filed Chapter 13, somewhere in your plan you are making up for the amount in arrears on your autos. If your bankruptcy was filed prior to the Bankruptcy Reform of 2005 your plan possibly "crammed down" the amount of your vehicle balances to the value of the cars. There is also a cap on the interest rate that the court will allow as well.

If you stop making the plan payments, your creditors will take your cars. If your bankruptcy is dismissed for failure to pay the trustee payments, you are no longer protected by bankruptcy and the Automatic Stay. Without the stay you can be sued, your wages can be garnished, you are open to collection and repossession.

Please speak with your attorney before you take the advice of anyone else.

Answer 2

The law changed drastically on October 17, 2005.   my understanding it does favor the bankrupt unless her income is below the state median level. Since the car is the subject of a secured transaction, I am surprised the car was not abandoned or left out of the bankruptcy reorganization.  You must convert to a Chapter 7 discharge bankruptcy if allowed under the 2005 amendments. No, you cannot "walk away."  You need the Bankruptcy Court's permission and discharge of your debts.  That was bad advice.  Good luck with your serious problem.

Answer 3

You need to talk to your attorney ASAP. He/she can ask the Court to lower the percentage of your unsecured debt, he lowered mine from 10% to 5 % (2 years ago), but keep in mind that he does not work for free and whatever he charges you it will be included in your plan.

Also if you don't finish your plan your creditors can and will charge you late fees, interest, penalties, etc. because you migth be losing the protection of the court.

I just finished my chapter 13 in April of 2008, and i saved my house and 2 cars.

Answer 4

First, when your chapter 13 repayment plan was set up, your income, your normal monthly living expenses, and your debts were all taken into consideration.   The debt repayment would have been adjusted to allow for your rent, utilities, phone, groceries, etc -- even luxuries like cable and internet would have been allotted for.  It's pretty obvious that you haven't learned anything about financial management and responsibility.

Secondly, if you 'walk away', you will no longer have the protection of the bankruptcy.  All those creditors will swoop down on you.  They will sue, win judgments then attach your bank account and garnish your wages.  You really won't be able to provide necessities like food for your kids.

And those two cars will be gone, gone, gone.

Answer 5

You need to talk with your bankruptcy attorney.

IMO, you need to keep paying on the BK, turn the cars back into the lenders and pay CASH for a used card.  Start sacrificing on YOUR things to provide for your children.  Something tells me that what you are saying are "certain necessaties" are really things like video games, vacations, etc. for your kids.  The only thing kids need is a safe home, food on the table, schooling, and health care.  Anything over that is a luxury.

Sorry to be so harsh but it sounds like you never learned the error of your ways from the first time you got into financial trouble.  You would benefit GREATLY from sitting down with someone who can help you budget and then STICK to that budget.

Answer 6

If you can maintain your current auto payments on the cars and have an agreed written agreement on how to handle your present autopayment arrearages you can either walk away relatively unscathed by your Chapter 13 experience or allow it to be converted to a Ch-7 liquidation so long as you have a written agreement to reaffirm your auto loan agreements.

      The answer is in your total debts and income. If you are paying off a large amount of unsecured (credit card) debt, this makes some sense...On the other hand if your debt is primarily secured debt and taxes you are only temporarily treading water.

Obtain good financial counseling from a source with access to your situation.

Good Luck