![]() A cramdown involves lowering your loan balance to your vehicle’s value. However, to get it back, you likely need to pay off the loan in full, according to the legal site .Īnother option you might have is to cram down the loan and pay only the fair market value of it. If the vehicle was repossessed, you may even be able to get the car back. If you file Chapter 13 bankruptcy, you may be able to keep paying on the loan and keep the car even if the loan is charged off. Any loan balance not recovered by the sale of the vehicle is now a deficiency balance, and it can typically be discharged, along with most other unsecured debts in Chapter 7 bankruptcy. If the loan is charged off and the lender repossessed the car, the loan balance is now unsecured. However, reaffirming is typically only possible if you’re current on the loan, and a charged-off auto loan means you’re not current – so redemption is likely your only choice if you want to keep the vehicle. If you want to keep the vehicle that’s still secured, then you need to reaffirm (keep making payments) or redeem the auto loan (pay for the car’s value in full). Since the title is in your name because the car hasn't been sold by your lender, the entire loan balance is a secured debt and you note this on your bankruptcy forms. If your car loan was charged off but you still have the vehicle, it's considered a secured debt. If your auto loan has been charged off but you still have the vehicle, then you may be able to keep the car depending on the Chapter of bankruptcy you file. Most unsecured debts and loans, such as credit card debt, qualify to be discharged if they’re not repaid by the end of bankruptcy. Once a vehicle is repossessed, any leftover loan balance after they sell the car is unsecured, which means it can usually be discharged during bankruptcy. ![]() ![]() When you promise to repay the auto loan, you agree that the lender can take possession of the car through repossession if you default. Car loans are secured debts, and the vehicle itself is what secures it. ![]() If you have a charged-off auto loan and you file bankruptcy, the debt could be discharged if the vehicle is repossessed. To do this, you have to list the debt as either secured or unsecured. When it comes to a charged-off car loan, whether you want to discharge the debt during bankruptcy or not, you must include it in your paperwork when you initially file. Not all charge-offs are associated with repo, and things can get complicated when it comes to bankruptcy. Some auto loans can be charged off without the vehicle being repossessed. The loan is typically sold or transferred to another lender or to a collection agency, and they attempt to collect the debt from you. However, just because it’s charged off doesn’t mean you’re no longer responsible for paying it. A charged-off debt is one that the lender has removed from their books and subsequently closed the account.Ī charged-off car loan, like a charged-off debt, is sold by the original lender. Charged-Off Car LoansĬharge-offs are unpaid debts that get classified as “bad debt” after multiple missed or late payments or unsuccessful attempts from the creditor to collect. ![]() When it comes to a charged-off auto loan, what happens to your car and the loan during bankruptcy depends on the status of your auto loan, which bankruptcy you choose, and your willingness to pay in order to keep the vehicle. ![]()
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