Car lenders hold a lot of power in Texas. For example, missing one payment gives a lender legal right to accelerate the loan or repossess the vehicle. Compounding the situation even worse is that after the car is taken and resold if the full amount owed was not recovered in the resale, the car lender can bill you for the deficiency balance. However, don’t fret, there are a lot of things you can do to prevent this.
Paying for your vehicle through a Chapter 13 can save you a lot of money because a Chapter 13 allows you to change the terms of the original note.
In every case the interest rate can be lowered to 4.25 percent. On a $15,000 car note, at 18 percent interest, with a payment term of 60 months, you would be looking at a payment of $475 per month outside of bankruptcy. If you put that same car in a Chapter 13 bankruptcy, you would pay around $303 per month, saving you $172 each month – with a total savings of $7,500.00.
If your car was purchased more than 910 days ago, then you could be eligible for what is called a “cram-down”. This allows you to repay the actual value of the vehicle, not what you owe on it. So, if you have a car that is actually worth $7,500.00 but you owe $12,000, then you would pay the $7,500 in your Chapter 13 bankruptcy.
In both of these examples, at the end of the Chapter 13 bankruptcy, you will own your vehicle free and clear.
Right of Redemption –
You have 10 days
In Texas, you have 10 days from the date of repossession to redeem the vehicle by payment of the entire debt in full, plus any expense relating to the repossession. Once the redemption period expires, your lender is able to sell your vehicle at a public auction.