Chapter 7 Bankruptcy
By filing for Chapter 7 Bankruptcy you can stop a repossession temporarily but sooner or later you will have the following choices.
1. Reaffirmation. This is an agreement with the car dealer or mortgage holder for you to pay the debt according to the original agreement – or changes to that agreement that you can negotiate. If you stop paying then the car dealer or bank can repossess or foreclose according to the Reaffirmation Agreement.
2. Ride-Through. Under this alternative you continue to pay for the car and the house under the original agreement. That's it. No renegotiation. No nothing. There are advantages to this which often makes it a better deal than the Reaffirmation. Many courts don't allow this alternative. Your attorney will advise you.
3. Surrender the house or car. If you owe more than the property is worth then it might be advisable to surrender the property and have your debt discharged in the Bankruptcy.
4. Redemption. You pay the dealer the value of the car in a single cash payment. Any amount you owe the dealer is wiped out. (There are lenders authorized by the Bankruptcy Code to make loans to you for redeeming your car.)
Chapter 13 Bankruptcy
You have 2 choices under Chapter 13.
1. Surrender the car and released from any debt.
2. Pay the loan off over (usual) 5 years under the Chapter 13 Bankruptcy.
